When to File PPP Forgiveness Applications

06/24/2020 3:40:04 PM

We finally received a TINY bit of guidance on the PPP loans and when to file PPP forgiveness applications. 

It’s true! The details are below. BUT we are not recommending you be in any big hurry to file for forgiveness. Why?

  • We do NOT recommend using the 8-week covered period because of the complex application process. Only if you have extenuating circumstances would we recommend this path. For instance, if you are planning to sell your practice and need forgiveness first, or you know your FTE count will be too low at the later 24-week date, then this might be recommended. 
  • We are still HOPEFUL there will be blanket forgiveness for PPP loans under $150K. This would negate the application process entirely for many recipients. It could be wishful thinking certainly. Nonetheless, why spend energy on something that may turn out to be unnecessary?  

With that said, here are the updates…

Recent guidance released by the Treasury Department has clarified when PPP borrowers can apply for forgiveness.

Here are some scenarios:

  1. Submit your forgiveness application before the Covered Period ends.
    • If there are Salary/FTE reductions, you must account for those reductions for the full 8 or 24-week period. Borrowers are not allowed to prorate reductions when applying before the Covered Period ends.
    • The forgiveness amount requested must be spent or incurred in the period stated on the application. For instance, a borrower applying 2 weeks before the Covered Period ends cannot include anticipated costs for the remaining 2 weeks.
  2. Submit your forgiveness application as soon as the Covered Period ends. 
    • This option is ideal for borrowers who didn’t reduce wages or FTE during the Covered Period, and who don’t need to wait for the Safe Harbor date.
  3. Submit your forgiveness application within 10 months after the Covered Period ends.
    • This option gives borrowers a chance to restore wage and FTE amounts by 12/31/2020, thus limiting forgiveness reductions.
  4. Submit your forgiveness application after the 10-month deferral period.
    • If borrowers do not apply for forgiveness within 10 months after the Covered Period ends, payments on principal and interest will begin.
    • Even if payments have been made after the deferral period, borrowers can still apply for forgiveness before the loan matures.