For those who borrowed money from the Paycheck Protection Program (PPP) in association with the Small Business Association (SBA), recipients have 10 months from the end of their 24-week covered period to apply for loan forgiveness before payments start coming due. For many, the time is now!
While the SBA is trying to simplify things for borrowers under $150,000 and opened up their own portal to speed up forgiveness, some lenders are doing it on their own. Be sure to contact the lender to for amounts over $150,000. There are some nuances to loan forgiveness, and some of can be confusing. For example, though it is not ideal, you can still apply for forgiveness after you start making loan payments. If your loan is ultimately forgiven, you will be reimbursed for the interest and payments you make along with the principal that is forgiven. In addition, if your loan isn’t completely forgiven, you can negotiate with your bank to convert a two year loan to a five year loan. This is because as part of the PPP Flexibility Act, PPP loans that were made after June 5, 2020 had a five year term. While loans made prior were not affected, those borrowers were allowed to negotiate and thereby extend the term.
Whatever your loan terms were, be mindful of your options and the time to apply for forgiveness. Of course, each situation is different so if you have any questions of concerns, be sure to reach out to us. It’s our business to know your business. Now that’s accounting done right!