PPP Loan Forgiveness Deadlines: Everything You Need to Know Before It's Too Late

You took out a Paycheck Protection Program loan during the pandemic to keep your business afloat. Maybe you used it for payroll, rent, or utilities—exactly what the program intended. But there's a crucial step many business owners overlook: actually applying for forgiveness. Without forgiveness, that "forgivable loan" becomes a loan you have to repay—with interest.

If you haven't applied for PPP loan forgiveness yet, this guide explains the deadlines you're facing, what happens if you miss them, and exactly how to get your loan forgiven before time runs out.

Understanding PPP Loan Forgiveness: The Basics

The Paycheck Protection Program distributed nearly $800 billion in loans to help businesses survive the COVID-19 pandemic. Unlike traditional loans, PPP loans were designed to be forgiven—meaning you wouldn't have to pay them back—if you used the funds for eligible expenses and met specific requirements.

However, forgiveness isn't automatic. You must actively apply for it, provide documentation, and meet deadlines. Failing to do so means you're on the hook for repaying the full loan amount plus interest.

The Critical Deadlines You Need to Know

Your Loan's Maturity Date

The most important deadline is your loan's maturity date. You can apply for forgiveness any time after you've spent the loan proceeds, but you must apply before the loan matures.

For PPP loans:

• Loans issued before June 5, 2020: 2-year maturity (meaning they matured in 2022)
• Loans issued on or after June 5, 2020: 5-year maturity (many maturing between 2025-2026)

If you received your loan in 2020 or 2021, calculate your maturity date by adding either 2 or 5 years to your disbursement date. This is your absolute deadline to submit a forgiveness application.

The 10-Month Payment Deferral Window

If you don't apply for forgiveness within 10 months after the last day of your covered period, you'll start making loan payments. The covered period is the 8- to 24-week window after you received the loan during which you were supposed to spend it on eligible expenses.

This 10-month deadline doesn't mean you've lost forgiveness eligibility—you can still apply. However, you'll have to make monthly payments while your application is being processed, and those payments won't be refunded if your loan is later forgiven.

The SBA Review Period

Once you submit your forgiveness application, the SBA has 60 days to review it and make a determination. If they request additional documentation or information, provide it promptly to avoid delays.

If the SBA denies forgiveness or reduces the forgiven amount, you have 30 days to appeal. During the appeal (which can take up to 120 days), your loan payments are deferred.

What Happens If You Miss the Deadlines?

Missing PPP forgiveness deadlines creates a cascade of financial consequences:

Immediate Consequences

You Start Making Payments

The minute your 10-month deferral window closes or you miss your maturity date, you must begin making monthly payments on principal and interest. For a $50,000 loan at 1% interest over 5 years, that's roughly $855 per month—money that could have been completely forgiven.

Interest Accumulates

PPP loans carry a 1% fixed annual interest rate. While that's incredibly low compared to other business financing, it still adds up. A $100,000 loan accrues about $2,500 in interest over 5 years if not forgiven.

Long-Term Consequences

Loan Default Risk

If you can't make payments, your PPP loan goes into default. The SBA will refer your account to the Treasury Offset Program for debt collection. This can result in:

• Garnishment of federal tax refunds
• Offset of other federal payments you're owed
• Negative impact on your business credit
• Legal action to recover the debt

Lost Forgiveness Opportunity

The most painful consequence is that you lose the chance to have the debt erased entirely. Once your loan matures, you can no longer apply for forgiveness. What was designed as pandemic relief becomes a liability you'll carry for years.

Financial Strain on Your Business

Monthly loan payments reduce your cash flow and working capital. For small businesses operating on thin margins, this unexpected expense can force difficult decisions like reducing staff, cutting inventory, or delaying expansion plans.

How to Calculate Your PPP Forgiveness Amount

Understanding what qualifies for forgiveness helps you maximize the amount you won't have to repay.

The 60/40 Rule

To receive full forgiveness, you must have spent at least 60% of the loan proceeds on eligible payroll costs, with the remaining 40% on other qualifying expenses.

If you spent less than 60% on payroll, your forgiveness will be reduced proportionally. For example, if you only spent 50% on payroll, you'd only be eligible for forgiveness on 50/60 (roughly 83%) of your loan.

Eligible Payroll Costs

Qualifying payroll expenses include:

• Salaries, wages, commissions, and bonuses (up to $100,000 annualized per employee)
• Cash tips or equivalents
• Vacation, parental, family, medical, or sick leave payments
• Severance or dismissal pay
• Group health insurance premiums
• Retirement contributions
• State and local payroll taxes

Excluded: Workers' compensation premiums, payments to independent contractors (they received their own PPP loans), and leave covered under the Families First Coronavirus Response Act.

Eligible Non-Payroll Expenses

The other 40% can be spent on:

Business mortgage interest (not principal payments) on mortgages in effect before February 15, 2020

Rent payments for leases in force before February 15, 2020

Utility payments for electricity, gas, water, transportation, phone, and internet service that began before February 15, 2020

Operations expenditures like software, cloud computing, accounting, HR, and supplier costs

Property damage costs related to public disturbances in 2020 not covered by insurance

Worker protection costs including personal protective equipment, barriers, ventilation improvements, and outdoor dining expansions

Salary and FTE Reductions

Your forgiveness amount may be reduced if you:

Cut employee salaries by more than 25% compared to the most recent full quarter before you received the loan

Reduced your full-time equivalent (FTE) employee count compared to your reference period

However, these reductions don't apply if you restored salaries and FTE counts by December 31, 2020, or if you can document that you couldn't find qualified employees or return to pre-pandemic business levels due to COVID-19 compliance requirements.

Step-by-Step: How to Apply for PPP Forgiveness

Step 1: Gather Your Documentation

Compile these documents before starting your application:

• Bank statements showing how you spent loan proceeds
• Payroll reports for your covered period
• Tax forms (941, state quarterly wage reports, 1099-MISC)
• Rent and mortgage payment receipts
• Utility bills
• FTE calculations comparing covered period to reference period
• Documentation of salary reductions and restoration (if applicable)

The SBA requires you to keep all PPP-related documents for six years after the loan is forgiven or repaid in full, so maintain organized records.

Step 2: Choose Your Covered Period

Select a covered period between 8 and 24 weeks starting from your loan disbursement date. A longer covered period gives you more flexibility to spend the funds and maintain payroll levels, but it also extends the time you must maintain FTE counts and salary levels.

For most borrowers, the 24-week covered period offers the best chance of full forgiveness because it provides more time to meet the spending requirements.

Step 3: Select the Right Forgiveness Form

There are three forgiveness application forms:

Form 3508S (Simplified) - For loans of $150,000 or less. This is the shortest form and doesn't require you to submit documentation upfront, though you must provide it if requested during review or audit.

Form 3508EZ - For loans over $150,000 where you meet one of these conditions:

• You're self-employed with no employees
• You didn't reduce salaries by more than 25% and didn't reduce FTE counts
• You couldn't operate at the same level due to COVID-19 compliance requirements

Form 3508 (Standard) - For all other borrowers. This is the most detailed form with comprehensive FTE calculations and salary reduction documentation.

Step 4: Submit Through the SBA Direct Forgiveness Portal

As of March 2024, all borrowers—regardless of loan size—can use the SBA's Direct Forgiveness Portal. This streamlined online system:

• Takes as little as 15 minutes to complete
• Guides you through the application with built-in calculators
• Allows you to upload supporting documents electronically
• Provides immediate confirmation of submission
• Tracks your application status in real-time

Access the portal at SBA.gov and log in with your MySBA account credentials. If you don't have an account, you'll need to create one using your loan information.

Alternatively, you can submit your application through your original PPP lender, though this may take longer to process.

Step 5: Monitor Your Application Status

After submitting, the SBA has 60 days to review your application. Check your application status regularly through the portal or by contacting your lender.

If the SBA requests additional information or clarification, respond immediately. Delays in providing requested documentation extend the review period and postpone forgiveness.

Step 6: Understand Your Forgiveness Decision

The SBA will issue one of three decisions:

Full Forgiveness - The entire loan amount plus accrued interest is forgiven. You owe nothing.

Partial Forgiveness - Some portion of your loan is forgiven, but you must repay the remainder plus interest on the unforgiven amount.

Forgiveness Denied - You must repay the full loan with interest. You have 30 days to appeal this decision.

If you disagree with the SBA's decision, file an appeal within 30 days. During the appeal process (which can take up to 120 days), you don't have to make loan payments.

Common Mistakes That Reduce Forgiveness

Spending Outside the Covered Period

Only expenses paid or incurred during your covered period count toward forgiveness. If you spent loan proceeds before the covered period started or after it ended, those expenditures don't qualify.

Paying Yourself Too Much

Owner-employees (including partners, self-employed individuals, and owner-employees of S-corporations) face compensation caps. For most, this is the lesser of $20,833 or 2.5 months of 2019 net profit. Paying yourself more doesn't increase forgiveness—you just won't get credit for the excess amount.

Forgetting the February 15, 2020 Date

Rent, mortgage interest, and utility expenses only qualify if the agreements were in place before February 15, 2020. New leases or mortgages signed after that date don't count, even if the payments occurred during your covered period.

Including Ineligible Expenses

Common mistakes include:

• Mortgage principal payments (only interest qualifies)
• Payments to independent contractors (they aren't employees for PPP purposes)
• Federal payroll taxes (only state and local taxes qualify)
• Business expenses incurred before your covered period began

Not Documenting FTE Restoration

If you reduced staff during the covered period but restored FTE counts by December 31, 2020, you avoid forgiveness reductions—but only if you document it properly. Make sure your application clearly shows both the reduction and restoration.

What If You Already Missed the Deadlines?

If you haven't applied for forgiveness and your deferral period has ended, you're likely already making payments. But it's not too late if your loan hasn't reached its maturity date.

Check Your Loan Status

Log into the MySBA Loan Portal to verify:

• Your exact loan disbursement date
• Your loan's maturity date
• Whether you've applied for forgiveness
• Your current payment status

Apply Immediately

Even if you're making payments, you can and should still apply for forgiveness if your loan hasn't matured. If your application is approved, the SBA will forgive the outstanding balance, and you won't have to make future payments (though payments you've already made won't be refunded).

Consider Professional Help

If you're close to your maturity date or unsure about your documentation, consider hiring a CPA or PPP forgiveness specialist. The cost of professional help is far less than repaying tens or hundreds of thousands of dollars.

Explore Hardship Options

If you can't afford your payments and don't qualify for full forgiveness, contact the SBA about hardship repayment plans. During the initial relief periods, the SBA offered plans with payments as low as $25 per month for borrowers facing financial difficulties.

PPP Forgiveness for Special Situations

Self-Employed with No Employees

If you're a sole proprietor, independent contractor, or single-member LLC with no employees, your forgiveness calculation is simpler. You can use Form 3508S, and your eligible amount is generally based on your 2019 net profit (line 31 of your Schedule C).

You can include:

• Owner compensation replacement (up to $20,833 for the 24-week covered period)
• Eligible non-payroll expenses (mortgage interest, rent, utilities, etc.)

S-Corporation Owners

S-corp owner-employees can include:

• Cash compensation (wages, not distributions)
• Employer-paid health insurance
• Employer retirement contributions
• Employer state and local taxes

However, distributions don't count as compensation for forgiveness purposes.

Partnership Owners

Partners can include their net earnings from self-employment, but not guaranteed payments that are already accounted for in business expenses. The calculation is based on 2019 net self-employment income.

Seasonal Businesses

Seasonal employers have special rules for calculating FTE counts. You can choose your reference period to be any 12-week period between February 15, 2019, and February 15, 2020, giving you flexibility to select a representative period.

How PPP Forgiveness Affects Your Taxes

The Good News: Tax-Free Forgiveness

Forgiven PPP loan amounts are not treated as taxable income. This is unusual—normally, forgiven debt creates taxable income, but Congress specifically excluded PPP forgiveness from taxation.

The Better News: Deductible Expenses

Initially, the IRS announced that expenses paid with forgiven PPP funds weren't tax-deductible. Congress reversed this in the Consolidated Appropriations Act of 2021, making PPP-funded expenses fully deductible.

This means you can:

1. Have your loan forgiven (not taxable income)
2. Still deduct the payroll, rent, and other expenses you paid with those funds

It's one of the most favorable tax treatments of any business relief program.

What You Need for Tax Filing

When preparing your taxes, note:

• Which expenses were paid with PPP funds
• The date your loan was forgiven
• Your total forgiven amount

Your tax preparer will need this information to properly categorize expenses and ensure you're maximizing deductions while staying compliant.

Resources and Where to Get Help

Official Resources

SBA Direct Forgiveness Portal: The fastest way to apply - sba.gov

MySBA Loan Portal: Check your loan status and payment history

SBA PPP Forgiveness FAQs: Comprehensive guidance on complex scenarios

Professional Assistance

Certified Public Accountants (CPAs): Can help with forgiveness calculations, tax implications, and documentation

PPP Forgiveness Services: Specialized firms that handle the entire application process

SCORE Mentors: Free business advice from experienced entrepreneurs who can guide you through the process

Small Business Development Centers (SBDCs): Free or low-cost counseling on PPP and other business financing

Don't Wait: Apply for Forgiveness Today

The window for PPP forgiveness is closing. If you haven't applied yet:

• Your loan's maturity date is approaching
• You're potentially making payments you don't have to make
• You're at risk of default if you can't afford payments
• You're missing the opportunity for complete debt forgiveness

The application process through the SBA's direct portal takes as little as 15 minutes. Gathering your documentation might take a few hours. But the payoff—having tens or hundreds of thousands of dollars forgiven—is worth far more than the time investment.

Check your loan status today, gather your documents, and submit your application before it's too late.

Track Your Business Finances with Confidence

Whether you're applying for PPP forgiveness or managing other aspects of your business finances, accurate record-keeping is essential. When it's time to document how you spent loan proceeds, having clean, organized financial records makes the difference between a smooth approval and a documentation nightmare.

Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data. Unlike traditional accounting software, your records are stored in a simple, readable format you can search, version-control, and access from anywhere—perfect for gathering the payroll reports, expense documentation, and FTE calculations needed for forgiveness applications. Get started for free and see why business owners are switching to plain-text accounting for better financial visibility.