The Treasury and Small Business Administration (SBA) have updated their Frequently Asked Questions (FAQs) on PPP Loan Forgiveness to indicate a change for loan payment deferral for borrowers from 6 to 10 months after the end of their 8- or 24-week covered period. The updated FAQs can be found on the SBA’s website. This is pertinent to borrowers as their covered period nears completion or has already ended and they begin to prepare their loan forgiveness application.
For example, if a borrower using the 24-week covered period received their PPP loan proceeds on Monday, April 27, 2020, the covered period would end on Sunday, October 11, 2020. Therefore, under the updated rules, the loan forgiveness application would be due 10 months after October 11, 2020.
Be Prepared for Potential Delays
A borrower must submit their loan forgiveness application and required supporting documentation to their PPP loan lender, whom in turn has 60 days to approve or request additional support from the borrower. After the lender approves the application, the SBA then has 90 days to approve forgiveness or request additional support from the borrower. Any delays or concerns with the lender or SBA could delay loan forgiveness.
Application Expiration Date
Currently each PPP loan forgiveness application form indicates an expiration date of October 31, 2020 at the top right of page 1. This is not the deadline for borrowers to apply for forgiveness and is strictly displayed by the SBA to comply with the Paperwork Reduction Act. This date will be extended, and once approved, the same forms will show a new expiration date.
What to Do Next
For many borrowers who received PPP loan proceeds, the 24-week covered period has ended or is near completion. The Treasury and SBA require extensive calculations and documentation to support full loan forgiveness. Please contact us for PPP loan forgiveness consulting or for any other issues related to the CARES Act. We’d be glad to assist you in navigating the everchanging rules and regulations.