SBA Further Clarifies Deferral of PPP Loan Repayments in FAQ 52

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SBA Further Clarifies Deferral of PPP Loan Repayments in FAQ 52

On October 7, the SBA released FAQ 52 to provide clarity regarding the deferral period for payments on Paycheck Protection Program (PPP) loans.

At the inception of the PPP, the deferral period could end after six months. With PPP loans funded as early as the first week of April, that six-month period would be ending now.

The FAQ reminds borrowers the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act) extended the deferral period for borrower payments of principal, interest, and fees on all PPP loans to the date that the SBA remits the borrower’s loan forgiveness amount to the lender.

If the borrower has not applied for loan forgiveness, the deferral period is extended to ten months after the end of the borrower’s covered period.

The extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. Lenders are required to give immediate effect to the statutory extension and should notify borrowers of the change to the deferral period. The SBA does not require a formal modification to the promissory note.

Preparing your PPP loan forgiveness application? Need assistance?

Consider working with an Aprio advisor. Our dedicated PPP team has been closely monitoring all updates from the SBA, IRS and the Fed. We’ve been working closely with both banks and businesses to facilitate loan forgiveness. Contact an Aprio Advisor for PPP loan forgiveness support or reach out to Aprio’s PPP loan forgiveness team.

Disclaimer for services provided relative to SBA programs and the CARES Act
Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.

The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.

Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.

You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.

In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.

Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.

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