To pay back a PPP loan, you make monthly payments on whatever portion of the principal wasn’t forgiven, plus 1% fixed interest, either to your original lender or through the MySBA Loan Portal if the SBA has taken over servicing. The rate doesn’t compound, there’s no prepayment penalty, and most loans carry a five-year maturity. Before you write a single check, though, confirm forgiveness is truly off the table.
Check Whether Forgiveness Is Still Available
The SBA still accepts forgiveness applications for up to five years from the date it issued your loan number.1U.S. Small Business Administration. PPP Loan Forgiveness Every borrower can use the SBA’s direct forgiveness portal regardless of loan size. If you spent the funds on eligible costs (payroll, rent, utilities, mortgage interest) during your covered period, you may still qualify for partial or full forgiveness.
There is a timing wrinkle. If you didn’t apply within 10 months after the last day of your covered period, your payment deferral ended and monthly payments became due.1U.S. Small Business Administration. PPP Loan Forgiveness You can still apply, but you have to keep making payments while the SBA processes it. If forgiveness comes through, the SBA reimburses your lender for the forgiven amount plus accrued interest, and payments you already made get credited.
Your Interest Rate and Term
Every PPP loan carries a fixed, non-compounding, non-adjustable 1% interest rate.2Office of the Law Revision Counsel. 15 USC 636(a) – Loans to Small Businesses Your maturity depends on when the loan was disbursed. Loans that received an SBA loan number before June 5, 2020, originally had a two-year term, and many were extended to five years by agreement between borrower and lender. Loans issued on or after June 5, 2020, automatically received a five-year term under the Paycheck Protection Program Flexibility Act.3Office of the Federal Register, National Archives and Records Administration. Public Law 116-142 – Paycheck Protection Program Flexibility Act of 2020 For loans left with a balance after partial forgiveness, the statute sets a minimum maturity of five years and a maximum of ten from the date you applied for forgiveness.
You can pay off the balance in full at any time with no prepayment penalty.4U.S. Department of the Treasury. Paycheck Protection Program Information Sheet If your cash flow allows it, early payoff saves interest and frees up borrowing capacity.
Where to Send the Payment
Where your payment goes depends on who currently services the loan.
Loans Still Held by the Original Lender
If your bank or credit union is still servicing the loan, pay them directly. Most provide a business banking portal with a “Loan Management” or “Make a Payment” section, and you’ll typically need the internal loan number your bank assigned along with a linked bank account.5U.S. Small Business Administration. Make a Payment to SBA Contact your lender for your current balance, due date, and payment options.
Loans the SBA Has Purchased
When a borrower falls behind, the lender can request that the SBA purchase its guaranty and charge off the loan.6U.S. Department of the Treasury. Guidance on SBA Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans At that point the SBA owns the debt, and you pay through the MySBA Loan Portal. One-time payments accept bank accounts, debit cards, and PayPal. Recurring payments accept bank accounts and debit cards, with debit-card recurring payments limited to 36 months and unable to extend past the card’s expiration date.5U.S. Small Business Administration. Make a Payment to SBA
An important change took effect on October 1, 2025: the SBA now only accepts electronic payments under a Presidential Executive Order. Checks mailed after that date will be returned.5U.S. Small Business Administration. Make a Payment to SBA
If Your Original Lender Is Gone
Some PPP lenders have closed, merged, or transferred their portfolios. If you don’t know who holds your loan, contact the SBA loan servicing center listed on your most recent statement. For SBA-purchased loans, the servicing center can point you to the MySBA Loan Portal.5U.S. Small Business Administration. Make a Payment to SBA Don’t stop paying because your original lender disappeared. The debt hasn’t.
Identifiers to Have Ready
Two numbers matter, and mixing them up is one of the most common processing errors. Your SBA loan number (sometimes called the E-TRAN number) is a ten-digit identifier assigned by the SBA and appears on your original promissory note and SBA Form 2483. This is not the same as the internal loan number your bank assigned. Have both on hand, because bank systems use one and the SBA’s system uses the other.
You’ll also need your Employer Identification Number, or your Social Security Number if you applied as a sole proprietor, to register for the MySBA Loan Portal or verify your identity with the servicing center. A digital copy of your signed loan agreement puts all of these identifiers in one place.
Figuring Out What You Owe
Start with the original loan amount your lender disbursed. Subtract whatever the SBA forgave. The remainder is your principal, and it has been accruing 1% interest since the day the funds hit your account. Interest kept building throughout the deferral period and while any forgiveness application was pending.7U.S. Department of the Treasury. Frequently Asked Questions on PPP Loan Forgiveness
One historical adjustment may affect your balance. The original CARES Act required the SBA to deduct any Economic Injury Disaster Loan advance you received from your forgiveness amount. Congress repealed that rule in December 2020 through the Economic Aid Act, and the SBA automatically sent reconciliation payments to lenders for amounts previously deducted.8U.S. Department of the Treasury. PPP Procedural Notice – Repeal of EIDL Advance Deduction Requirement If your lender never adjusted your balance to reflect that change, raise it now.
Your total payoff is the non-forgiven principal plus accumulated interest. Contact your lender or check your payment portal for a current payoff figure; it moves slightly every day.
What Happens If You Fall Behind
Federal collection tools work faster and hit harder than most private lender remedies. Once you’re 60 days past due, your lender can demand payment in full and ask the SBA to purchase the guaranty and charge off the loan.6U.S. Department of the Treasury. Guidance on SBA Guaranty Purchases and Lender Servicing Responsibilities for PPP Loans After charge-off, absent a valid legal defense such as bankruptcy, the loan is referred to the U.S. Treasury for collection.
The SBA must send you written notice before escalating, giving you 60 days to respond. If you don’t, the agency reports the debt to consumer credit bureaus, which can damage both personal and business scores.9eCFR. 13 CFR 140.3 – What Rights Do You Have When SBA Tries to Collect a Debt Beyond credit reporting, the government can:
- Seize your federal and state tax refunds and reduce other federal payments, including Social Security benefits, through the Treasury Offset Program.
- Order your employer to withhold a portion of your disposable pay through administrative wage garnishment, without a court order.10eCFR. 13 CFR 140.11 – Administrative Wage Garnishment
- Pursue multiple remedies at the same time; wage garnishment doesn’t stop other collection methods.10eCFR. 13 CFR 140.11 – Administrative Wage Garnishment
Borrowers who don’t comply with forgiveness or repayment conditions are referred to Treasury for offset or cross-servicing.1U.S. Small Business Administration. PPP Loan Forgiveness If you can’t make a payment, call your lender or the SBA loan servicing center before you hit 60 days. Working something out proactively is much easier than reversing Treasury collection after the fact.
Selling or Closing the Business Before Payoff
If you’re transferring ownership or selling assets while the loan is still open, SBA rules may apply. For transfers of 50% or less of stock or ownership interest, prior SBA approval isn’t required as long as you have submitted a forgiveness application and set up an interest-bearing escrow account controlled by your lender equal to the full outstanding balance. The same escrow requirement applies to asset sales of 50% or more of the business’s fair market value. Once forgiveness finishes, escrow funds go first toward any remaining loan balance plus interest.11U.S. Department of the Treasury. SBA Procedural Notice – PPP Loans and Changes of Ownership
If you’re financing the purchase with an SBA 7(a) loan, those 7(a) proceeds can’t be used to fund the escrow.11U.S. Department of the Treasury. SBA Procedural Notice – PPP Loans and Changes of Ownership Closing the business doesn’t erase the debt either. The obligation follows you personally if you signed a personal guarantee, and the SBA can still pursue collection after charge-off.
Tax Treatment of the Interest You Pay
Interest on the non-forgiven portion is generally deductible as a business expense, the same as interest on any other business loan. Congress confirmed in the Consolidated Appropriations Act of 2021 that otherwise deductible business expenses paid with PPP funds remain deductible, and the interest on your remaining balance falls under the standard rules for business interest expense under Internal Revenue Code Section 163.
One limit to know about: for tax years beginning in 2026, the business interest expense deduction is generally capped at 30% of adjusted taxable income, plus business interest income and any floor plan financing interest.12Internal Revenue Service. Questions and Answers About the Limitation on the Deduction for Business Interest Expense For most small businesses paying 1% on a modest balance, this cap won’t bite. If you carry significant other business debt, check with your accountant.
Confirming the Loan Is Closed
Allow three to five business days after any payment for it to appear in your loan history, and verify the funds were applied to both interest and principal. Before making a final payoff, request a current payoff figure from your lender or through the MySBA Loan Portal, because interest accrues daily and even a small shortfall means the loan isn’t technically closed.
When your balance reaches zero, your lender should issue a satisfaction or release document confirming the debt is fully extinguished. Keep it permanently. If the debt ever surfaces incorrectly on a credit report or in government records years from now, that document is your proof you owe nothing.