Do You Have to Pay Back Your BlueAcorn PPP Loan? A Complete Guide

During the COVID-19 pandemic, the Paycheck Protection Program (PPP) helped small businesses with their finances in a big way. Many businesses turned to lenders like BlueAcorn to get these loans that might not have to be paid back. But now, people who took out BlueAcorn PPP loans are wondering if they have to pay them back.

The short answer is – it depends Whether or not you have to repay your BlueAcorn PPP loan hinges on if you apply for and receive loan forgiveness

This guide to paying back a BlueAcorn PPP loan will go over everything in great detail. By the end, you’ll understand .

• The criteria to have your BlueAcorn PPP loan forgiven
• How to apply for PPP loan forgiveness through BlueAcorn
• What happens if your forgiveness application is denied
• The repayment terms if your PPP loan isn’t forgiven

Let’s get started!

Overview of BlueAcorn PPP Loan Forgiveness

The best case scenario is to have your full PPP loan amount forgiven. These loans were intended to be forgivable to aid small business owners in keeping their staff paid and doors open.

You won’t owe any payments if your loan is forgiven. The amount forgiven essentially converts the loan into a grant.

Forgiveness Eligibility Requirements

To be eligible for full PPP loan forgiveness, you must have:

• Used the loan funds during the 8 to 24 week covered period after receiving them
• Spent at least 60% on payroll expenses
• Maintained employee headcount and compensation levels
• Spent the money only on eligible expenses like:
  • Payroll
  • Rent
  • Mortgage interest
  • Utilities
  • Operations expenditures
  • Property damage costs
  • Supplier costs
  • Worker protection expenditures

Providing documentation to prove these expenses is key to the process.

How to Apply for BlueAcorn PPP Loan Forgiveness

Forgiveness is not automatic – you have to apply. The application window begins once you have spent all loan proceeds, and ends 10 months after you received the money.

You can submit your BlueAcorn PPP forgiveness application in two ways:

1. Through BlueAcorn’s forgiveness portal—This streamlined process lets you talk to your lender directly about the request. BlueAcorn has an easy-to-use online portal for forgiveness requests.

2. Through the SBA – The SBA has its own forgiveness portal you can use as well.

Whichever route you choose, the process involves providing documentation of your eligible expenses during the covered period.

What Happens After You Apply for Forgiveness

Once you submit your application, here’s what to expect:

• Lender Review – Your lender has 60 days to review your application and make a decision. Most happen much faster than the 60 day window.

• SBA Review – After the lender decides, your application gets sent to the SBA for verification. The SBA has 90 days to agree or disagree with the lender’s determination.

• The SBA will audit random loans as part of quality control. If yours gets flagged, it may take longer to get final forgiveness approval.

• Notification – Both your lender and the SBA will notify you once they’ve processed your forgiveness application.

• Loan Balance Update: If approved, the amount of the forgiveness will be taken off of your loan balance. If the whole amount is forgiven, you will have no debt.

What If Your Forgiveness Application Gets Denied?

Unfortunately, forgiveness denials do happen. Common reasons include:

• Insufficient documentation of eligible expenses
• Failure to spend 60% on payroll
• Inability to maintain employee compensation and headcount

If part or all of your forgiveness request gets denied, you will have to repay the loan. The unpaid balance enters repayment status once your forgiveness application gets processed.

However, you can appeal a denial if you disagree with the decision. Gather more evidence to back up your eligible costs and submit an appeal request.

PPP Loan Repayment Terms if Not Forgiven

Now let’s discuss what happens if you don’t apply for forgiveness or get denied.

In both cases, you will have to repay the outstanding loan balance. Here are the repayment terms to expect:

• Interest Rate – PPP loans have a 1% interest rate, which is very low.

• Loan Term – Loans originated before June 5, 2020 have a 2 year term. Those after June 5, 2020 have a 5 year repayment term.

• Payments – Your first payment will be due 10 months after receiving the loan funds. Your lender will contact you to arrange payments.

• Prepayment – There are no early repayment fees. You can pay down the balance faster with no penalty.

While having to repay the loan isn’t ideal, the interest rate is very low. And you have up to 5 years to repay – much longer than a typical small business loan term.

Tips to Increase Chances of BlueAcorn PPP Loan Forgiveness

Here are some tips to boost your odds of full forgiveness:

• Carefully track expenses – Maintain detailed records proving you spent the money on approved costs.

• Prioritize payroll – Be sure payroll accounts for 60%+ of expenditures. Pay yourself a salary rather than distributions.

• Limit reductions – Avoid cutting employee wages and headcount.

• Apply ASAP – Submit your application as soon as you have documentation ready.

• Work with your lender – Ask your lender questions to ensure you provide correct documentation.

• Appeal denials – Fight a denial by supplying additional evidence if you have it.

Questions on BlueAcorn PPP Loan Forgiveness?

While full forgiveness isn’t guaranteed, you can maximize your chances by following program rules closely. And even if you do need to repay part or all of the loan, the terms are quite borrower-friendly.

If you have any other questions on BlueAcorn PPP loan repayment or forgiveness, don’t hesitate to ask. I’m happy to explain further. Just drop a comment below!