The Paycheck Protection Program ended on May 31, 2021, and most of its loans were forgiven. What remains in 2026 are the loose ends: balances that were never forgiven, small defaulted loans the government once quietly set aside and has since picked back up, and a fraud-enforcement effort running on a 10-year clock. Those are three very different situations, and the most important thing this page can do is keep them separate, because owing an unforgiven balance honestly and having misrepresented an application are not the same problem, not the same process, and not the same risk.
The unusual shape of a PPP debt
PPP was a bank loan wearing a government program’s terms. SBA’s founding interim final rule set them out in four lines: the SBA guarantee is 100 percent, no collateral is required, no personal guarantees are required, and the interest rate is 1 percent. Maturity was two years under the original rule, and Congress set a minimum of five years for loans made on or after June 5, 2020 in the PPP Flexibility Act (Public Law 116-142).
Forgiveness was the intended exit, not repayment. SBA’s live forgiveness page still frames the mechanics that way: payments deferred while forgiveness is pending, and if a borrower does not apply within 10 months after the covered period ends, payments to the lender begin. The same page sets the outer limit: forgiveness applications are accepted “any time up to five years from the date that SBA issued the SBA loan number.” Since no PPP loans were made after the program closed on May 31, 2021, that five-year window has now effectively run out across the portfolio. If you believe you still have a forgivable balance, that conversation with your lender needed to happen yesterday, and should happen today regardless.
What default actually looks like
An unforgiven balance is owed to your lender, at 1%, on the note’s schedule. Miss it, and the sequence resembles a compressed version of 7(a) default: the lender attempts collection, then asks SBA to honor its guarantee. Because the guarantee is 100 percent, the government absorbs the entire loss and becomes the party your debt answers to. From there, SBA’s forgiveness page is unambiguous about the destination: borrowers who have not complied “will be in default of their PPP loan and will be referred to Treasury for offset or cross servicing.” That means the Treasury collection machinery: interception of federal payments such as tax refunds, and servicing by Treasury rather than SBA.
Because standard PPP loans carried no personal guarantee, the contract debt belongs to the borrower named on the note. For an LLC or corporation, that is the entity. For a sole proprietor or independent contractor, the borrower is the person, the same structural point that decides so much in COVID EIDL’s $200,000 rule. And as with EIDL, charge-off is an accounting event, not forgiveness, and no one can honestly promise what a compromise would yield.
The $100,000 lesson: quiet is not resolved
For two years, small defaulted PPP loans looked abandoned, and for a while they administratively were. A House Small Business Committee investigation documented an April 2022 SBA memo ending active collection, and Treasury referral, on purchased PPP loans with balances of $100,000 or less and COVID EIDLs of $100,000 or less, a universe of roughly 10.1 million PPP loans totaling $228.7 billion at or under that line. Then the policy reversed: SBA notified Congress on December 28, 2023 that it would begin referring those loans to Treasury. By April 24, 2026, the pendulum had swung entirely: SBA announced it had referred 562,000 suspected fraudulent PPP and COVID EIDL loans tied to $22.2 billion to Treasury for collection, its largest referral package on record, with the borrowers also transmitted to the Department of Justice.
The takeaway for an honest borrower with a small unpaid balance is not fear, it is realism: collection policy on pandemic loans has flipped twice in four years, and the current direction is toward more collection, not less. A balance that produced no letters in 2023 can produce Treasury offsets now.
The fraud caveat, stated plainly
Everything above concerns honest debt. Fraud is a different universe, and Congress built it that way on purpose. On August 5, 2022, two companion laws were signed: the PPP and Bank Fraud Enforcement Harmonization Act of 2022 (Public Law 117-166) and the COVID-19 EIDL Fraud Statute of Limitations Act of 2022 (Public Law 117-165). Each provides that any criminal charge or civil enforcement action alleging borrower fraud may be filed not later than 10 years after the offense was committed. Conduct from 2020 and 2021 remains chargeable into the early 2030s.
The scale of that enforcement effort is documented, not speculative. SBA’s Inspector General estimated more than $200 billion in potentially fraudulent COVID EIDL and PPP disbursements, about 17 percent of disbursed funds, per GAO’s March 2025 review of SBA’s fraud-referral controls (SBA’s own, narrower estimate was about $36 billion). GAO reported SBA had referred roughly 54,000 PPP loans to its Inspector General with full case memos for likely fraud, with tens of thousands more escalated internally.
So keep the two situations separate, because the government does. An unforgiven balance honestly owed is a debt: it accrues 1% interest, it can be offset and cross-serviced, it damages the business’s standing, and it is resolvable through payment or, in some circumstances, compromise. A materially false certification, on revenue, headcount, eligibility, or use of funds, is misrepresentation exposure: personal, potentially criminal, unaffected by the absence of a guarantee, and alive for a decade. No collection policy, charge-off, or entity structure converts the second into the first.
This is not legal advice
If you have an unforgiven PPP balance, call your lender, confirm your forgiveness and payment status in writing, and open everything that arrives from SBA or Treasury. If any communication mentions ineligibility, misrepresentation, or the Office of Inspector General, stop improvising and retain a lawyer before responding; that is true whether or not you believe you did anything wrong. Free business counseling through an SBDC or SCORE can help with the debt side. This page explains the process and the law as written; it does not substitute for advice on your loan or your exposure.