By Jennifer Mailhes, CPA – Shareholder

Business owners that took out a first-round Paycheck Protection Program (PPP) loan that had a 24-week covered period should consider applying for loan forgiveness – and soon. If not, the loan may become permanent and you will be held responsible for loan payments and interest. Here’s what you need to know about applying for loan forgiveness so you can avoid these unnecessary costs.

If a PPP loan borrower doesn’t apply for forgiveness with the U.S. Small Business Administration (SBA) within 10 months of the end of the covered timeframe in which they had to spend the loan proceeds, the loan will automatically change into a standard loan at 1% interest. The program launched in April 2020 with some of the first borrowers having an eight-week covered period, then the popular 24-week covered period was introduced. Borrowers operating under the eight-week option had a loan forgiveness application deadline this past July, while those who selected the popular 24-week option still have until September to apply and prevent the loan from converting.

Doeren Mayhew’s PPP advisors highly recommend those with the 24-week covered period to apply for loan forgiveness as soon as possible; it would be unfortunate for a small business to miss out on an opportunity to have their loan forgiven just because they were unaware of their deadline. If your business is ready to file for loan forgiveness and needs assistance with its application, contact our PPP advisors today.