How long do I have to pay back my PPP stimulus loan for COVID-19?
April 08, 2020
In this 2-minute read:
- How long do you have to pay back your PPP loan?
- When can you start paying back your PPP loan?
- Can Paycheck Protection Program loans be forgiven?
One question on a lot of business owners’ minds right now is how long do they have to pay back their Paycheck Protection Program (PPP) loans? Not every business will be required to pay back their emergency stimulus loans (learn more below), but for those who do have to pay back the full or partial amount, we have the answer.
Womply is acting as a facilitator to connect American small businesses to SBA-authorized lenders to get emergency loans for COVID-19 relief. Start your free application here, or call us at 855-208-8813 for a free consultation.
The PPP loan application window is open until June 30, 2020, which is the length of time you have to apply for the loans, however with the amount of other businesses applying, you should try to get your application in as soon as possible.
Note: Many lenders are bowing out of the SBA’s paycheck protection program loans due to overwhelm or other reasons, so don’t assume your normal business banking partner will be able to accept and submit your application for a PPP loan.
We recommend you start your PPP loan application here (it’s free) and we’ll work our hardest to get you to the front of the line with approved SBA lenders. And if you’d like to know how much you may qualify for, you can use our simple SBA PPP calculator.
How long do I have to pay back my COVID-19 PPP loan?
The short answer to this question is that you have two years to pay back your PPP loan and the 1% interest that accrues from the time that you receive it.
However, there is a little more detail to these loans and how they can be paid back that we want to bring your attention to.
PPP loans can be forgiven when certain criteria are met. The intent of this program is to save American jobs, so there’s a huge incentive to use the funds to maintain your employees and paychecks at pre-COVID-19 levels.
If you use the entirety of your loan to maintain your headcount and compensation levels and to pay for approved expenses like utilities and rent, then you can qualify for forgiveness of the full loan amount. This means you don’t have to pay back the loan principal… ever!
(Please note that interest is not forgiven, and though it accrues at a very low 1%, you will need to pay it back.)
Check out our full article for more information on PPP loan forgiveness
If you don’t meet some or all PPP loan forgiveness requirements or have to pay back at least a partial amount, that amount will be due two years from the time you receive it.
But we recommend starting to pay that off as soon as possible because even a 1% interest rate on a large loan adds up after that time.
When do I need to I start paying back my PPP interest and loan?
All loan payments will be deferred for 6 months, meaning that don’t have to make any payments until 6 months after you receive your funding.
This makes sense because you’ll need to apply for PPP loan forgiveness with your lender as soon as you have documentation proving that you have used the PPP money for approved, forgivable expenditures, which will obviously take some time after the 8 weeks covered by the PPP loan.
But you can start paying your PPP loan back as soon as you are able to.
There are no prepayment penalties or fees for paying your PPP loans back earlier. And paying down your principal as early as possible (if you determine you need to pay all or part of it back) will help keep the interest from accruing on the full principal amount over the full maturity of the loan.
If you have more questions about the Paycheck Protection Program loan process, read our full PPP FAQs here.
Need help applying for a PPP loan?
Womply is a verified agent that can help your business apply for an emergency stimulus loan from an eligible lender. Click here to start your free application, or reach out to us today at 855-208-8813 for a free consultation.
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