The Covered Period begins on the date the loan was originally disbursed (the "Disbursement Date"). It ends on a date selected by the Borrower that is at least 8 weeks following the date of loan disbursement and not more than 24 weeks after the date of loan disbursement.
Per SBA guidance, borrowers are required to use all proceeds from their First Draw Loan before receiving a Second Draw loan. This means that if you received a First and Second Draw loan in 2021, your First Draw loan’s Covered Period end date must be before your Second Draw loan’s disbursement date. They cannot overlap.
In addition to considering whether a borrower spent, or expects to spend, their PPP loan funds within a given period of time, other considerations that a borrower may want to account for when selecting the duration of their Covered Period include:
- Whether they reduced, or expect they may need to reduce, any employees’ salary or wages and if so, when
- Whether they laid off and/or re-hired any employees or expect to do so, and if so, when
A borrower's particular business circumstances will inform which duration works best and we recommend consulting a business or tax advisor if you have questions about your specific business.