PPP Loan Forgiveness Update
On October 1st, FUBA (Florida United Business Association) issued a status update on PPP loan forgiveness. Check out their article below for helpful links and information.
As a reminder, the forgiveness application process is handled through your lender. The necessary forms for loan forgiveness are included in this article, however your lender may have a separate set of forms (hopefully electronic and online) for application filing. Use the forms provided below to prepare your business for what is needed when filing.
PPP Loan Forgiveness Update – Still No Automatic Forgiveness
For the past few months, a bill has been pending in Congress that would automatically forgive PPP loans under $150,000. If this law is approved, small businesses who received a PPP loan of less than $150,000 can have their loan automatically forgiven without having to file a forgiveness application with their bank.
As of today, Congress still has not approved automatic forgiveness of PPP loans for small businesses.
Because the loan forgiveness application is lengthy, many small businesses are waiting to file their application in the hopes that Congress will approve automatic forgiveness. As of now, there is still plenty of time for you to wait and see if Congress acts.
The current deadline to apply for PPP forgiveness is 10 months after the end of your loan’s “covered period.” The covered period for your loan started the day you received the PPP loan and either lasts 8 weeks or 24 weeks, depending on the date you received your loan.
If you received your PPP loan before June 5, 2020, your loan’s covered period is either 8 weeks or 24 weeks, whichever you choose. If you received your PPP loan after June 5, 2020, your loan’s covered period is 24 weeks after the date you received your loan.
Your 10-month period to apply your loan forgiveness application starts after your loan’s covered period ends. For example, if you received your PPP loan on May 1st, you could choose either 8 weeks or 24 weeks to spend your loan. If you chose an 8-week covered period, you must have spent your entire PPP loan by June 26th and you have 10 months after that to apply for forgiveness. If you choose the 24-week covered period, you have until October 16th to spend your PPP loan, and then you have 10 months from that date to apply for forgiveness.
If you do not apply for forgiveness within 10 months of the end of your loan’s covered period, your PPP loan will become an actual loan that you will have to pay back with a 1% interest rate for a term of 2 years (if your loan was approved prior to June 5, 2020) or 5 years (if your loan was approved after June 5, 2020).
To apply for loan forgiveness, you will need to file the Small Business Administration’s application (Form 3508) with the bank that issued the loan to you. If your business did not reduce the number of its employees or their wages, you can use the more streamlined Form 3508EZ. Both forgiveness applications as well as their instructions are available from our Coronavirus Resources for small businesses. FUBA members with questions about PPP loan forgiveness can ask our experts by calling us at 800-262-4483.
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