When Does PPP Loan Repayment Start?

If you’re a small business owner who has received a Paycheck Protection Program (PPP) loan, you may be wondering when the loan repayment period starts. The answer depends on a few factors, including the size of your loan and the terms of your loan agreement.

In general, the repayment period for a PPP loan begins six months after the loan is disbursed. However, you may be able to defer payments for up to a year if you meet certain criteria.

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Introduction

The Paycheck Protection Program (PPP) loan forgiveness application process is still ongoing, and the Small Business Administration (SBA) continues to issue new guidance on the program. One common question we’ve been hearing from borrowers is “When does PPP loan repayment start?”

Here’s what we know so far about PPP loan repayment:

The PPP loan forgiveness process is still ongoing, and the SBA continues to issue new guidance on the program. One common question we’ve been hearing from borrowers is “When does PPP loan repayment start?”

Here’s what we know so far about PPP loan repayment:

-If you are eligible for forgiveness, you will not have to make any payments on your loan until the SBA has processed your forgiveness application and issued a decision.
-If you are not eligible for forgiveness, you will have to begin making payments on your loan, including any interest that has accrued, no later than 10 months after the end of your covered period.
-You will be required to make payments on your loan even if your forgiveness application is still pending with the SBA.

What is the PPP Loan?

The Paycheck Protection Program (PPP) loan is a government-backed loan that helps small businesses keep their workforce employed during the coronavirus (COVID-19) pandemic.

The loan is 100% forgiven if used for eligible payroll costs, including benefits, and mortgage interest or rent payments and utility payments over the eight-week period beginning on the date of loan approval. If you don’t use all of the funds for these expenses, a portion of the loan may not be forgiven.

Loan repayment begins eight weeks after receiving the loan. You will have up to 10 years to repay the loan if it’s not fully forgiven.

How Does the PPP Loan Work?

The PPP loan is a low-interest loan that is intended to help small businesses keep their workers employed during the COVID-19 pandemic. The loan is 100% forgivable if you use it for eligible payroll costs, mortgage interest, rent, and utilities. You have up to 24 weeks to use the loan, and you can begin repayment anytime after that. If you have not used the entire loan amount after 24 weeks, you can still receive partial forgiveness.

What are the Terms of the PPP Loan?

The Paycheck Protection Program (PPP) loan has a maximum maturity of 10 years and an interest rate of 1%. Loan payments will be deferred for six months. No collateral or personal guarantees are required. The PPP loan may be forgiven if the funds are used for payroll costs, interest on mortgages, rent, or utilities and if employees are kept on the payroll for eight weeks.

When Does PPP Loan Repayment Start?

The PPP loan repayment period begins on the date that the first payment is due. For most borrowers, this will be six months after the loan is disbursed. However, some borrowers may have the option to defer their loan payments for up to a year.

What Happens if I Don’t Repay My PPP Loan?

If you don’t repay your Paycheck Protection Program (PPP) loan, the Small Business Administration (SBA) will be unable to forgive the loan. This means you will be responsible for repaying the entire loan amount plus any interest and fees that accrue. You may also be subject to late payment penalties.

Conclusion

You are not required to begin repaying your PPP loan until the maturity date, which is typically two or five years from loan disbursement. However, you may choose to make voluntary repayments of your loan before the maturity date. If you do not make a voluntary repayment, the entire outstanding balance of your loan will be due and payable on the maturity date.