Many PPP Loan Forgiveness Applications Are Due Soon
Some of the earliest PPP loan recipients are just about to reach the deadline by which they must file an application requesting those loans to be forgiven or begin making payments on the loans.
The CARES Act introduced PPP loans (explained in a number of BNN articles, including one published in April 2020), providing funding to help businesses weather the pandemic storm. The PPP rules included the concept of a “covered period” in which businesses were expected to spend the funds. Beginning on the date of the loan disbursement, the covered period initially was 8 weeks long but was expanded to include as many as 24 weeks. Within 10 months of the end of the covered period, recipients would be responsible for either beginning to make repayments or submitting an application for forgiveness of that loan.
While subsequent “draws” of additional PPP funding were made available (discussed in BNN articles on December 2020 and January 2021), the “first draw” program was incredibly popular, and its funding was exhausted by mid-April 2020, just weeks after its March 2020 rollout. Some recipients used an 8-week covered period, and their deadline already has come and gone; by now, they should have filed the application or begun making payments. However, many early recipients would have chosen a 24-week covered period beginning in April and ending in October 2020, which in turn set in motion a 10-month forgiveness application window that closes sometime next month in August 2021. Those recipients have very little time left to complete the application and provide the related support.
Observation: The ability to apply for loan forgiveness does not completely disappear at the end of the 10-month window described above; applicants instead are able to request forgiveness at any time prior to the loan’s final payoff/maturity date. Some action must be taken by the end of that 10-month period though, consisting of the forgiveness application or commencement of partial repayment. If eligible, applicants should apply for forgiveness before beginning to make loan payments unnecessarily.
We encourage those in that position to act quickly before the window closes, and anyone who obtained PPP funding that is not yet forgiven should be mindful of the deadlines and responsibilities for dispatching that loan.
For more information, please contact your BNN tax service provider at 800.244.7444.
Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.