While borrowers who have received Paycheck Protection Program (PPP) funds have until the maturity date of the loan to apply for forgiveness, be aware that payments become due if the application has not been submitted within 10 months of the last day of the Covered Period. Any borrower that has not requested forgiveness within the 10 months, must begin making loan payments to their PPP lender as the payments will no longer be deferred.
For example, a business received PPP loan funds on May 15, 2020. Assuming they used the 24 week covered period, their covered period ended on October 30, 2020. This would result in the 10-month payment deferral to end August 30, 2021, and they would need to have their application submitted by then to avoid payments becoming due.
The Small Business Administration explains that The Covered Period is: “either (1) the 24-week (168-day) period beginning on the PPP loan disbursement date, or (2) if the borrower received its PPP loan before June 5, 2020, the borrower may elect to use an eight-week (56-day) Covered Period.” For more information or assistance with your application, reach out to your lender or visit the SBA website at: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/paycheck-protection-program