By: Pooja Keshan and Jyoti Jhaveri
Paycheck Protection Program (PPP) loans have allowed small businesses across the United States to maintain their workforces during the economic downturn caused by the COVID-19 pandemic. PPP loans are forgivable if borrowers meet certain conditions, like spending a certain proportion of loan proceeds on payroll costs and retaining employees. As more businesses finish using their PPP funds and prepare to apply for loan forgiveness, there are a few key things to keep in mind.
PPP borrowers must apply for loan forgiveness within 10 months after the last day of their loan covered period with the same lender that processed their loan. The covered period is the time-period during which the borrower must spend all their PPP loan proceeds and lasts either eight or 24 weeks from the loan disbursement date.
To qualify for loan forgiveness, borrowers must meet certain conditions like:
The PPP loan covered period is either:
Borrowers must start making payments on or before the PPP loan’s maturity date if only a portion of their loan is forgiven or if their forgiveness application is denied. Loans issued prior to June 5 have a two-year repayment period, while loans issued after June 5 have a five-year repayment period. If a PPP loan is fully forgiven, borrowers do not have to make any loan payments.
The amount of a borrower’s loan that is eligible for loan forgiveness can be reduced based on a variety of factors:
To ensure you maximize your PPP loan forgiveness amount, contact your trusted Chugh CPAs, LLP professional.
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