Payroll Protection Program (PPP) – When to submit the loan forgiveness application?

Updated: Aug 5


According to SBA, PPP recipients can early apply for loan forgiveness. The new interim final reflects that a borrower can submit the loan forgiveness application form any time and no need to wait until the covered period ends.

A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrowers have used all of the loan proceeds for which the borrower is requesting forgiveness.

The guidance also states that if a borrower applies for the loan forgiveness before the end of the covered period and has reduced any employees’ salaries or wages by more than 25%, the borrower must account for the excess salary reductions for the full covered period (8-week or 24-week period, whichever one is applied to this loan).


For instance, a borrower received the PPP loan before June 05, 2020. He elects to use a 24-week covered period. He also reduces his employee’ wages from $1,000 per week during the reference period (01/01/2020 – 02/29/2020) to $700 per week during the covered period. That means the wages reduction percentage is more than 25% (25% of $1,000). Therefore, when he applies for the loan forgiveness, he must account for $1,2000 wages reduction ($50 per week) even he applies the application form before the end of the covered period.

So, when is the actual deadline to submit the PPP loan forgiveness application form?

The latest interim final says that the deadline will not come until 10 months after the end of the covered period. After that day, if the borrower does not apply for the forgiveness or the SBA determines that the loan is not eligible for forgiveness (for the whole or a part of the loan), the borrower must be starting to pay the principal and interest.


Paycheck Protection Program Loan in a brief

The Paycheck Protection Program (PPP) program was introduced and backed by the Small Business Administration (SBA). The PPP loan is for helping small businesses who are affected by coronavirus pandemic. This loan encourages businesses to keep paying their employees and keeps doors open for business. The PPP Loan program allows eligible borrowers to obtain loans in order to cover payroll costs and other eligible expenses such as certain mortgage interest, rent, utilities, certain health care benefits, and health insurance premiums.


After many updates and changes on the loan forgiveness’ requirement, the PPP loan now has highlighted:

- At least 60% of the loan must be used for Payroll cost

- Maximum 40% of the loan could be used for Non – Payroll Cost

- The maturity date of the loan is extended from 2 years to 5 years

- The covered period could be 8 weeks or 24 weeks

- Exemptions for the reductions on FTE (full-time equivalent) employees

The deadline to apply for a PPP loan is August 08, 2020.


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