According to the SBA, PPP loan forgiveness can be applied for as soon as the borrower has used all of the loaned funds for eligible expenses.
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Applying for PPP Loan Forgiveness
You can apply for PPP loan forgiveness any time after the covered period for your loan ends. However, you must submit your application no later than 10 months after the end of your covered period. If you don’t apply for forgiveness within this timeframe, you will have to start making payments on your loan, and you will not be eligible for loan forgiveness.
Check if You’re Eligible
If you’re a business owner with a PPP loan, you may be wondering when to apply for PPP loan forgiveness. The answer depends on several factors, including the type of business you have, how much money you’ve borrowed, and when you plan to use the funds.
Here are some things to consider when deciding when to apply for PPP loan forgiveness:
-If you have a sole proprietorship or independent contractor, you can apply for loan forgiveness as soon as your 8-week covered period ends.
-If you have a business with employees, you can apply for loan forgiveness anytime between 8 and 24 weeks after your covered period begins.
-If you’re unsure about your eligibility, it’s best to speak with a lender or SBA-approved counselor before beginning the application process.
Remember, the sooner you apply for forgiveness, the sooner you can get back to business as usual.
Gather the Required Documentation
To apply for forgiveness of your PPP loan, you (or your loan servicer on your behalf) must submit to the lender that made your loan a completed Loan Forgiveness Application and documentation verifying the number of full-time equivalent (FTE) employees and pay rates for the covered period or the alternative payroll covered period.
You will need to provide your lender with documentation verifying the following:
-Payroll and non-payroll expenses paid with PPP loan proceeds
-Number of FTE employees during the covered period or alternative payroll covered period
-If you’re claiming a reduction in FTE employees, you will need supporting documentation
-If you’re claiming an increase in wages, you will need to provide supporting documentation for each employee
Submit Your Application
You can submit your PPP loan forgiveness application to your lender at any time. However, we recommend waiting until you’ve used up your entire PPP loan before applying. This way, you can be sure that you’ve utilized all of the funds and meet the eligibility requirements for forgiveness.
Keep in mind that you only have ten months from the end of your covered period to apply for forgiveness. So if you don’t submit your application by then, you won’t be eligible for forgiveness and will have to repay the entire loan amount plus interest.
What to Do If You’re Not Eligible
If your business is not eligible for PPP loan forgiveness, you have a few options. You can apply for an Economic Injury Disaster Loan (EIDL), which is a loan from the Small Business Administration (SBA). You can also try to negotiate with your lender for a loan modification or forbearance. You can also sell your business, although this may not be the best option.
Check If You’re Eligible for an EIDL Loan
The SBA’s Economic Injury Disaster Loans (EIDL) offer low-interest disaster loans to small businesses that are impacted by a declared disaster. You can use an EIDL loan for working capital and other business purposes.
If you’re not eligible for a PPP loan, you may still be eligible for an EIDL loan. To be eligible, your small business must:
-Be located in a declared disaster area
-Have suffered substantial economic injury as a result of the declared disaster
-Be unable to obtain credit elsewhere
-Be small business concern as defined by the Small Business Administration
Consider Applying for a Different Loan
If you’re not eligible for PPP loan forgiveness, you may want to consider applying for a different type of loan. The Small Business Administration (SBA) offers several different loan programs that can help small businesses get the funding they need.
One option is the SBA’s 7(a) Loan Program. This program offers loans of up to $5 million for businesses with strong credit histories. The loans can be used for a variety of purposes, including working capital, equipment purchases, and real estate acquisition.
Another option is the SBA’s 504 Loan Program. This program provides long-term, fixed-rate financing for major business purchases, such as real estate or equipment. Loans are available for up to $5 million and can have terms of up to 20 years.
If you’re not eligible for either of these programs, you may still be able to get funding through the SBA’s Microloan Program. This program provides loans of up to $50,000 to small businesses and start-ups. The loans can be used for a variety of purposes, including working capital, inventory, or furniture and fixtures.
What to Do If You’re Denied
The Paycheck Protection Program loan forgiveness application process can be long and complicated.
Review the SBA’s Reasons for Denial
If you’re denied for a PPP loan, the first thing you should do is review the SBA’s reasons for denial. According to the SBA, there are several reasons why a PPP loan may be denied, including:
-You are not eligible for the PPP loan program.
-You fail to meet the eligibility requirements.
-You did not submit all of the required documentation.
-You submitted inaccurate or incomplete information on your application.
-The SBA determine that you are not able to repay the loan.
If you think that the SBA’s decision to deny your PPP loan was unfair, you can appeal the decision. The SBA has an appeals process in place for borrowers who believe they were treated unfairly or who have new information that would change the decision.
Appeal the Decision
If you feel that you’ve been unfairly denied forgiveness, you can appeal the decision by reaching out to your lender. You’ll likely need to provide additional documentation to support your case, so be prepared.
If you’re not satisfied with the response from your lender, you can also file a complaint with the Small Business Administration (SBA). The SBA will then review your case and make a determination.
Keep in mind that the appeal process can be lengthy, so it’s important to stay on top of it and follow up regularly. However, it’s important to remember that appeals are often successful, so don’t give up!
Refile Your Application
If you filed your application on time and included all required information, but were still denied, you have the option to refile your application.
To do so, simply resubmit your application with the correct information. Be sure to include any documentation that may have been missing from your original application, such as proof of payroll expenses or other required documentation.
If you believe that you did not receive a decision on your application within the 60-day period, you may also refile your application. However, you should first contact the lender to confirm that they did not receive a decision within the 60-day timeframe.