When Should You Submit Your PPP Loan Forgiveness Application, Earlier or Later?
By Joshua Prince, CPA, MST - Manager
November 16, 2020
The Paycheck Protection Program (PPP), a program that provided small-sized businesses with funds to pay up to 24 weeks of payroll and other nonpayroll business costs, officially closed to new loan applications on August 8, 2020.
The Small Business Administration (SBA) began accepting PPP loan forgiveness applications from lenders on August 10, 2020. In order to be eligible for loan forgiveness, borrowers must submit a PPP loan forgiveness application (Form 3508, 3508EZ, or 3508S)
within 10 months after the last day of the Covered Period (between 8 weeks and 24 weeks after the date PPP funds were received) before any loan repayment begins. For example, a borrower who received PPP funds on May 1, 2020 and is claiming a covered period of 24 weeks, ending on October 15, 2020, has until August 14, 2021 to apply for loan forgiveness before loan repayment begins.
The SBA allows lenders 60 days to complete its review of a PPP loan forgiveness application before issuing a decision to the SBA. Then, the SBA will, subject to any review of the forgiveness application, issue the appropriate forgiveness amount to the Lender within 90 days. Borrowers who received $2 million or more will be subject to a “full review” before the loan can be forgiven, according to the Department of Treasury.
For many borrowers who received PPP funds, the big question remains “When should I submit my PPP loan forgiveness application, earlier or wait until the application due date (i.e., 10 months after the end of my Covered Period)?” We discuss several issues below that may impact your decision about when to apply for PPP loan forgiveness.
The loan forgiveness rules and application are complex. We encourage you to consult with your MichaelSilver advisor and our CARES Act Team for questions about completing and submitting your PPP loan forgiveness application. We can be reached at 847.982.0333.