Paycheck Protection Program – Loan Forgiveness
At the time your Paycheck Protection Program (PPP) loan was originated, SBA guidance provided for a 6-month deferral of the first loan payment date. However, the SBA has since revised its guidance on payment deferrals.
The revised SBA guidance allows you substantial time to apply for loan forgiveness:
- You have up to ten months to apply for forgiveness after the expiration of either an 8-week or 24-week Covered Period.
- Even if your PPP loan is not fully forgiven, you will not have monthly payments due until such time the SBA renders a final loan forgiveness decision.
As long as you submit your PPP loan forgiveness application within ten months after the completion of your selected Covered Period (either an 8-week or 24-week period in which you spend the PPP loan proceeds), you are not required to make any payments until the SBA determines and remits the forgiveness amount to Mountain West Bank as your lender.
You will receive a letter from Mountain West Bank in October, which will provide additional detail and serve as documentation to automatically defer your PPP loan payments.
Each of our PPP borrowers will be contacted via email by a member of our PPP Loan Forgiveness Team. Our team of Loan Forgiveness Specialists will provide additional information regarding the loan forgiveness process. They will also follow up with those borrowers ready to apply for loan forgiveness by sending them a pre-filled application on the form the borrower determines they are eligible to use.There are some important considerations to be made as PPP loan borrowers prepare for the forgiveness process. We’ve highlighted three key factors below, but strongly encourage you to consult your own counsel, accountant or other advisors to evaluate the individual facts and circumstances of your PPP loan and the forgiveness process. Treasury and the SBA have published a set of frequently asked questions at PPP Loan Forgiveness FAQs (opens in new window).
“EZ” Form Eligibility – The Small Business Administration (SBA) made two forgiveness applications available; the “EZ” Form and the standard, longer form (also referred to as the 3508EZ and 3508, respectively). As the name implies, the EZ Form is easier to fill out and requires less documentation, though it will still take time to complete. It’s worth taking the time now to review the SBA’s EZ Form instructions (opens in new window), and determine whether you’re eligible to use it.
Covered Period Selection – You can select an 8-week or 24-week Covered Period (and for payroll expenses, there is also an option for an 8- or 24-week “Alternative” Covered Period). This is the period during which the PPP loan proceeds must be spent, and it’s also the period during which forgiveness will be calculated. Your Covered Period starts on the day you received the loan funds. There are benefits and drawbacks to using either the 8- or 24-week period. Select the one that works best for your business.
When to Apply – You can apply for forgiveness once you are at least 8 weeks from the date you received your loan funds. If you’re at 100% forgiveness and are selecting an 8-week covered period, it may make sense to apply right away. However, if you’re at less than 100% forgiveness, you can opt for a 24-week covered period and take more time to reach full forgiveness. Even if you opt for a 24-week covered period, you can apply for forgiveness before the end of the 24 weeks. If you decide to apply early and are not eligible for the 3508EZ application, there are some additional factors you should consider with your advisor(s); such as which safe harbor provisions you qualify for, whether your forgiveness amount would be reduced by an early application, etc.
No matter when you decide to apply, we are ready to serve you.
Finally, please be aware that once you apply, it may take up to 150 days to obtain a final forgiveness determination from the SBA. We will inform you of the SBA’s final determination as soon as we have it.