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PPP Forgiveness Deadline Approaching for Program’s Early Borrowers

  • Deadline to submit an application for forgiveness on a Paycheck Protection Program loan is approaching for certain borrowers
  • Borrowers must apply for forgiveness within 10 months of the end of the covered period of their PPP loan
  • Forgiveness applications can be submitted after the deadline, but borrowers will be responsible for principal and interest payments while awaiting a decision

Summary by Dirk Langeveld

Deadlines are approaching for business owners who took out a Paycheck Protection Program loan in one of the early rounds of funding.

Payments on PPP loans are deferred for 10 months after the end of the borrower’s covered period. A second round of funding opened in April 2020 after an initial round was quickly depleted, meaning some borrowers who opted for the maximum coverage period of 24 weeks will see their deadline to submit a forgiveness application arrive in August.

Borrowers may still apply for forgiveness after the deferment period ends, but will be required to pay principal and interest on the loan until their bank and the U.S. Small Business Administration make a decision. These entities have up to five months to consider these requests.

In May, the SBA reported that it has already forgiven more than 70 percent of PPP loans it made in 2020. However, 1.7 million businesses that took out a loan last year have not yet submitted an application to have it forgiven.

Some businesses may be intentionally delaying their forgiveness applications in order to take full advantage of the Employee Retention Tax Credit. However, financial officials are also seeking to remind businesses about the approaching deadline in case they simply lost track of it.

PPP loans can be fully or partially forgiven if the funding was used for approved purposes. Sixty percent of the loan must have gone toward employee payroll and benefits, while the remainder could have been used for purposes such as rent and utilities.

Borrowers whose loans are not forgiven or only partially forgiven must repay the balance at a 1 percent interest rate. Loan terms are two years for loans issued before June 5, 2020 and five years for those issued afterward.

The SBA is taking steps to improve the forgiveness process, including streamlining applications for loans of $150,000 to $2 million and potentially withdrawing a supplemental questionnaire for loans of $2 million or more. A simplified one-page forgiveness application is available for loans of under $150,000.


The SBA recommends that PPP borrowers contact their lender to acquire the correct form, then compile documentation on payroll and non-payroll costs incurred during the covered period before submitting the forgiveness application. Borrowers should also stay in contact with their lender after the application has been submitted to be aware of any additional information that is required and to stay up to date on the status of their application.

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