10/08/20 – Extended Due Date for 1st PPP Loan Payment

Last night, the SBA issued a new FAQ related to the extended due date of borrowers’ first PPP loan payments. Originally, the first PPP payment was only deferred for 6 months. Many borrowers have made it through their entire 24 week Covered Period at this point and may be wondering whether they need to abide by that due date on their original loan document. However, with the passing of the Paycheck Protection Program Flexibility Act back in May, all PPP deferral periods for principal, interest, and fees were extended to the date the SBA remits your PPP forgiveness amount to the Borrower’s bank (or 10 months after the end of your Covered Period if the Borrower does not apply for forgiveness). According to the FAQ, “lenders are required to give immediate effect to the statutory extension and should notify borrowers of the change to the deferral period.” What this means is that there is nothing the Borrower needs to do in order for this extension to apply. The extension is granted automatically through the PPP Flexibility Act. Check out this article from the Journal of Accountancy for more information.