With the deadline for the Payment Protection Program (PPP) loans fast approaching, we wanted to share a quick reminder regarding what you need to know when it comes to applying and achieving loan forgiveness. June 30 will be here before we know it, and after this deadline, the PPP loan will no longer be available as a source of COVID-19 financial relief for businesses.
Over 4.6 million loans totaling $514,939,789,916 have been made as of June 20. Since the PPP loan became available, the Small Business Administration (SBA) and Congress have made improvements, clarifications, and amendments to the law. In the beginning, understanding and applying for the loan was much more challenging, for the rules required more details and it was difficult to find a participating bank. Eventually, changes and clarifications were made, and the options for banks grew.
If you have not yet applied for the PPP loan and are looking to, make sure to do so ASAP. Even though the deadline is June 30, many banks are already closing their application portals. Need help with finding a lender? SBA has provided Lender Match as a free online tool that connects small businesses with SBA-approved CDFIs and small lenders (do not use if looking for Disaster loans).
If you are applying or have applied recently, don’t forget to follow the new loan forgiveness rules under the Paycheck Protection Program Flexibility Act. Here are some of the recent changes to the PPP loan rules regarding loan forgiveness eligibility:
- The spending time frame has been extended from 8 weeks to 24 weeks. This starts on the day the funds are received.
- A business owner must spend 60% of the PPP loan funds on payroll expenses. Those who spend less than this percentage can still qualify for partial forgiveness. Before the Flexibility Act, this percentage was 75%.
- In order to achieve maximum forgiveness, businesses must rehire employees who were on staff as of February 15th. Originally, they had to complete this by June 30th. Now, employers have until December 31st.
- Employers now also have more time to repay. Previously, any portion of the loan ineligible for forgiveness was expected to be paid within 2 years. This time frame has now been extended to 5 years for loans that were made on or after June 5.
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