SBA Payroll Protection Program (PPP) Loan Forgiveness:
Once borrower has used all funds from PPP first draw and second draw loans, they can apply for forgiveness any time up to the maturity date of the loan. But if the borrower does not apply within 10 months after the last day of the covered period, they will need to start making loan payments to their lender.
Before applying for forgiveness, first determine if lender is participating in direct forgiveness through SBA, as the SBA portal may be used to apply for forgiveness. If lender is not participating, the borrower can apply for forgiveness through lender.
Second, it is important to use the correct form. SBA FAQ’s and information on which form to use, what supporting documents need to be submitted etc. are available via the following link.
Some things of note are-
- If borrower submits a timely application, they are not required to make loan payment until forgiveness amount is remitted to the lender by the SBA.
- If funds are used for the intended purposes and all conditions satisfied, most loans will be eligible for full forgiveness.
- There is an appeal process if a borrower’s PPP loan has not been forgiven in full. Details here: https://www.sba.gov/about-sba/oversight-advocacy/office-hearings-appeals/ppp-appeals
- If loan hasn’t been fully forgiven, repayment terms are as below:
- For loans received prior to June 5, 2020, repayment term is 2 years and for loans received after that date, repayment term is 5 years.
- Fixed Interest at 1%.
- Payments begin 10 months after end of covered period.
- No collateral or personal guarantees needed.
SBA Economic Injury Disaster Loans (EIDL):
As of January 1, 2022, SBA is no longer accepting new applications for COVID EIDL loans/ advances but will continue to accept applications for loan increases, appeals and reconsideration. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/covid-19-economic-injury-disaster-loans
For borrowers who already received an EIDL loan prior to April 7, 2021, additional funding may be available for loan increase up to $2,000,000. For details on the loan to apply click here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/covid-19-economic-injury-disaster-loans
The payment deferral period has been extended to 2022 (24 months from the date of the note). Voluntary payments can be made during the deferment period, as interest will continue to accrue on the outstanding loan balance.
EIDL Advance is no longer available.
SBA will continue to review and approve Targeted advance application received prior to December 31, 2021. AS of January 1, 2022, declined targeted advance applicants can submit one request for reevaluation. Details on link below.