If you're navigating the Paycheck Protection Program (PPP) for your business, understanding and meeting key deadlines is crucial. PPP loans, introduced to support businesses through the economic effects of the COVID-19 pandemic, have specific conditions under which they can be forgiven. Missing these deadlines could impact your chances of receiving loan forgiveness or might lead to your loan becoming a standard SBA loan with interest. Here’s a comprehensive guide on the 5 must-know deadlines for PPP loan forgiveness.
1. The Loan Disbursement Date
Your PPP loan forgiveness eligibility starts from the date the loan proceeds are deposited into your account. Here’s what you need to know:
- Covered Period: The 8- to 24-week period following the disbursement of your loan funds is the time you need to use these funds for forgivable purposes.
- Application Submission: While the SBA has not imposed a strict deadline from disbursement to forgiveness application submission, lenders might have their own deadlines for submitting applications.
2. The End of the Covered Period
This is when you must stop using your PPP funds for forgivable expenses. Here’s a breakdown:
- Date Determination: If your loan was funded after June 5, 2020, your covered period can be any length from 8 weeks to 24 weeks.
- Expense Tracking: Make sure all expenses you intend to submit for forgiveness are incurred during this period.
📌 Note: While you can use funds for non-forgivable expenses, these must be excluded from your forgiveness application.
3. The Payroll Cost Period
This deadline is crucial as payroll costs constitute the largest portion of forgivable expenses:
- Payroll Cycle: Ensure you have at least 60% of the loan amount going to payroll costs to qualify for full forgiveness.
- Timing: You might choose a different covered period for payroll, but it must fall within the allowed 8- to 24-week window from loan disbursement.
4. Employee Restoration and Headcount Deadline
If you have reduced headcount or salaries, you need to restore them by certain dates:
- By December 31, 2020: Restore FTEs to the level on or around February 15, 2020, to qualify for full forgiveness.
- By June 30, 2020: If you’re not using the safe harbor provision, you have until this date to reinstate salary or wages reductions.
5. Forgiveness Application Deadline
While the SBA has not set a hard deadline for submitting your forgiveness application, here are some key points:
- Lender Deadline: Lenders might set their own deadlines, so check with them for specifics.
- SBA Processing: The SBA has up to 90 days to review applications once submitted by lenders.
- Documentation: Make sure to prepare all necessary documents well in advance to avoid any last-minute complications.
Summing up, being aware of these deadlines is paramount for maximizing your PPP loan forgiveness. From the moment funds are disbursed to the final submission of your forgiveness application, every step needs to be meticulously timed. Remember, your lender might have additional deadlines or requirements, so keeping in close communication with them will ensure you're on track for full forgiveness. Monitoring these dates, understanding the rules, and preparing your documentation can mean the difference between a forgiven loan and one that accrues interest. Keep your records accurate, maintain open lines of communication with your lender, and you'll be well-prepared to navigate this process.
What happens if I miss the payroll cost period deadline?
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If you miss the deadline for using the funds for payroll costs, you might not be able to have 60% of your loan forgiven, reducing the amount of forgiveness you receive.
Can I apply for forgiveness before the end of my covered period?
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No, you need to use the funds within your chosen covered period, track expenses, and only then submit your forgiveness application to your lender.
What documentation do I need for the forgiveness application?
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Key documents include payroll documentation, copies of utility bills, rent agreements, and other expense receipts that qualify for forgiveness.
Can I use the entire loan for non-payroll expenses and still qualify for forgiveness?
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No, you must use at least 60% of the loan proceeds for payroll costs to be eligible for full forgiveness.
