What is the covered period for PPP loan forgiveness? When does it start?
April 27, 2020
In this 2-minute read:
- When does the 8-week coverage period begin?
- How do I maximize forgivable expenses?
- How do I apply for PPP loan forgiveness?
As business owners are receiving there emergency relief funding from the SBA-approved lenders for the Paycheck Protection Program (PPP), one of the biggest concerns is how to make sure this loan gets forgiven.
The PPP loan is intended to cover an 8 week period of time to help your business manage payroll costs and other essential business expenses. If you adhere to the directives and intent of the loan, spend it on approved PPP expenses, and apply for loan forgiveness, you won’t ever have to pay the loan back!
IMPORTANT NOTE: On Wednesday, May 13, 2020, the SBA released revisions to their FAQs regarding PPP loan forgiveness. Read the details here.
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.
When does the 8-week coverage period start for PPP loans?
The 8-week period for your loan (and consequently your loan forgiveness), starts at the time when you receive the money from your PPP loan. According to the PPP, once your loan is approved and you receive an E-tran number, your funding should hit your account within 10 days.
During the 8 weeks following the receipt of your funds, you must use your PPP loan money for its intended purpose and the requirements set up by the SBA in order to receive loan forgiveness.
That includes using the funds to cover payroll expenses (at least 75% of your loan must go towards payroll costs) and other essentials like business mortgage, commercial rent, and utilities.
Be sure to keep good records of where this money is spent, because at the end of the 8-week period, you can request loan forgiveness from your lender.
Note: if you have had to reduce staff or compensation, and/or you have had employees quit during this crisis, you have until June 30, 2020 to restore your full time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
(Also note, you do NOT have to hire the same people you had before. You just need to keep your previous headcount and compensation levels.)
How can I maximize my forgivable expenses during this 8-week coverage period?
You can maximize your forgivable expenses for the PPP loan to help your business keep as much of that money as possible (without having to pay it back).
Your PPP loan can only be used toward expenses incurred during the 8-week period from the time you receive your loan. While you may not be able to control when your rent and utility bills go out, you can adjust your payroll costs to line up with the timing of your PPP loan.
If you adjust the timing of your payroll date to coincide with your PPP loan funds hitting your account, you can pay the maximum amount of allowable payroll costs during the 8-week covered period.
For more details about PPP loans and forgiveness, please read our complete FAQs here.
Can I still apply for PPP loans?
If you haven’t applied for a PPP loan yet, we strongly suggest doing this as soon as possible. Technically, the program does run through June 30, 2020, however with the high demand for this program, funds are quickly running out (for the second time).
Womply is a verified loan facilitator working with SBA 7(a) approved lenders who are accepting applications, and we can help you through the loan application process and pair you up with 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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