October 19th, 2020
October 31 is Halloween, but it is NOT the due date for PPP loan forgiveness applications to be submitted.
This potential issue was clarified by SBA on Tuesday, October 13. Additional guidance relating to the due date for filing PPP loan forgiveness applications has been added to the SBA PPP Loan Forgiveness frequently asked questions.
The addition made on October 13 is Question and Answer #4:
Question: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner. Is October 31, 2020 the deadline for borrowers to apply for forgiveness?
Answer: No. Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan.
For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins.
The expiration date in the upper-right corner of the posted PPP loan forgiveness application forms is displayed for purposes of SBA’s compliance with the Paperwork Reduction Act, and, reflects the temporary expiration date for approved use of the forms. This date will be extended, and when approved, the same forms with the new expiration date will be posted. [All questions and answers published August 4, 2020 unless specified otherwise. General Loan Forgiveness FAQ 4 published October 13, 2020].
Therefore, the guidance tells us most definitely that the PPP loan forgiveness due date is not October 31, 2020, nor is it at the end of the taxpayer/borrower’s covered period. This guidance should provide your client borrowers with a sigh of relief. However, be reminded that these funds were provided by commercial lenders who are pressuring their PPP borrowers to apply for forgiveness as soon as possible so they, the lender, can recoup their money more quickly.
Hopefully this information helps you advise your client borrowers. Stay tuned…information will likely continue to evolve.
by Tom O’Saben, EA
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