There is no question small business owners are on pins
and needles for what the future holds. A solution offered by The Small Business
Administration (SBA) was a Paycheck Protection Program (PPP) loan for small
business owners to help keep employees. However, eligibility for the PPP closed
August 8, 2020.
You now have 10 months to submit a PPP loan
forgiveness application and are not required to make payments until the
forgiveness amount is remitted to the lender by SBA.
If your PPP loan was fully forgiven then you are not
required to make any payments. However, if only part of your PPP loan was
forgiven or your PPP loan forgiveness application was denied, you must repay
the remaining balance due on the PPP loan
before the maturity date. Remember, interest continues throughout the life of
the PPP loan and you are responsible for the accrued interest on any amount of
the PPP loan that has not been forgiven.
Whoever was the PPP lender, they are responsible for
informing you the amount forgiven or if no amount of the PPP loan was forgiven.
They are also responsible for telling you the borrower the first payment due
When Will I Know How Much I Owe?
All borrowers have 10 months after the 8 to 24 week
“Covered Period” to apply for PPP loan forgiveness. Once the PPP loan
forgiveness application has been submitted, the PPP lender has 60 days to
submit it to the SBA. The SBA has 90 days to make a final decision concerning
your PPP loan.
If your business does not qualify for 100% forgiveness
your first payment will be due once a final decision is made by the SBA. The
lender will determine your loan amount generally on the monthly anniversary of
the disbursement date. A statement will be issued to you at that point.
When Is The Entire Loan Due?
The entire loan due date will be two years, if you
were approved before June 5, 2020 or five years if approved after June 5, 2020.
You can pay the loan off early without penalties or fees.
The terms of all PPP loans are at 1.0% interest rate, as
mentioned before interest on the loan will continue during the loan. Last, you
can defer repayment of an unforgiven loan until the SBA pays the full loan
forgiveness amount of your lender. If you do not apply for PPP loan forgiveness
you can defer repayment up to 10 months after the loan disbursement date.
I Need Help?
SWVA Tax & Accounting is here to help you solve
your small business problems and provide solutions that work. We are aware of
all the constant changes concerning small business and would love to help you. Please
seek us out for all your business tax needs. We’ll run the numbers, while you
run the business. Don’t know hesitate to contact us at 540-250-3298, or
schedule an appointment online at https://www.swvatax.com/#Contact