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Key Facts
- Federal level: The official name was the Paycheck Protection Program, or PPP; “Payroll Protection Program” is a common but incorrect variation.
- Federal level: Congress created PPP in 2020 as a temporary SBA-guaranteed loan program intended to support payroll and other authorized costs during the COVID-19 emergency.
- Federal level: PPP ended on May 31, 2021, so no lender can make a new PPP loan today.
- Federal level: Existing borrowers may still face forgiveness, servicing, repayment, review, recordkeeping, or enforcement matters.
- Federal level: Loan forgiveness depended on eligible use of proceeds and compliance with program requirements; receiving a loan did not automatically erase the debt.
The “Payroll Protection Program” usually refers to the federal Paycheck Protection Program. Congress created PPP during the COVID-19 emergency to move forgivable loans through private lenders to eligible small businesses and other covered organizations. It was temporary, and it no longer accepts applications.
PPP combined federal rules with private loan administration. The Small Business Administration guaranteed covered loans, participating lenders originated them, and borrowers made certifications about eligibility, need, payroll, and use of funds. That structure explains why an existing issue may involve both a lender and the SBA.
What the Paycheck Protection Program was designed to do
The CARES Act added PPP to the SBA’s existing 7(a) business-loan authority. Its central purpose was to help covered employers retain workers and pay authorized costs during severe pandemic disruption. Payroll costs were central, but later rules also recognized specified mortgage interest, rent, utilities, operations, supplier, property-damage, and worker-protection expenses.
PPP was a loan program, not an automatic grant. The federal guaranty protected participating lenders under the program, while forgiveness allowed a qualifying borrower to have an eligible amount paid by the SBA. Any balance not forgiven remained a loan obligation under the governing terms.
First Draw and Second Draw loans were different
A First Draw loan was the original PPP loan available to eligible recipients. Congress later authorized Second Draw loans for some borrowers that had already received and properly used a First Draw loan.
Second Draw eligibility was narrower. SBA materials generally required no more than 300 employees, use of the full First Draw amount for authorized purposes, and at least a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020. For most borrowers, the maximum Second Draw amount was 2.5 times average monthly payroll costs, capped at $2 million; a 3.5 multiplier applied to qualifying accommodation and food-services businesses.
Why PPP applications are closed
The PPP Extension Act of 2021 moved the statutory covered period to June 30, 2021, while limiting new loan applications to the period ending May 31. SBA now states plainly that the program ended on May 31, 2021. A website that offers a new PPP application in 2026 is not originating a loan through the closed federal program.
Closing new applications did not eliminate administration of existing loans. Lenders and the SBA still handle forgiveness decisions, servicing records, reviews, appeals, collections, and enforcement under the surviving statutory and regulatory framework. The related PPP rules therefore remain relevant to existing loan files.
How loan forgiveness works now
SBA’s current forgiveness process allows borrowers to use the Direct Forgiveness Portal or work through their lender. Since March 13, 2024, the direct portal has been available for PPP loans of any size, although lenders may continue to accept applications through their own systems.
A borrower may request forgiveness after using all proceeds for which forgiveness is sought. SBA identifies Forms 3508, 3508EZ, and 3508S, each with its own eligibility and documentation rules. Form 3508S applies to loans of $150,000 or less and does not require supporting documents with the initial submission, but records can still be requested in a review or audit.
Payments generally stop being deferred if forgiveness is not requested within ten months after the covered period ends. SBA also states that borrowers can apply for forgiveness up to five years after the SBA loan number was issued. Those timelines concern existing loans; they do not reopen eligibility for a new PPP loan.
Approval, forgiveness, and review are separate decisions
Loan approval addressed the application as presented at origination. Forgiveness concerns whether the borrower met the requirements for cancellation of some or all of the balance. An SBA loan review can separately examine eligibility, calculations, certifications, and use of proceeds.
That separation matters because approval did not guarantee full forgiveness, and forgiveness did not necessarily prevent a later review of eligibility or fraud. Federal law provides a ten-year limitations period for criminal charges or civil enforcement actions alleging borrower fraud involving a PPP loan.
PPP was not the Treasury Payroll Support Program
The similar names cause confusion. PPP primarily served eligible small businesses and related recipients through SBA-guaranteed loans. Treasury’s Payroll Support Program was a different CARES Act program for passenger airlines, cargo air carriers, and certain contractors to support aviation payroll.
The correct program name, loan number, lender, and agency identify which rules govern an old file. “Payroll protection” in informal correspondence may mean PPP, but an official document labeled Payroll Support Program can concern a different federal benefit entirely.
