PPP Payment Deferral Extension Applied to All Borrowers

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PPP Payment Deferral Extension Applied to All Borrowers

All borrowers who participated in the Paycheck Protection Program (PPP) are eligible for the extended payment deferral period that went into effect in June, even if the loan transaction took place earlier in the year.

That is the new guidance released by the U.S. Small Business Administration (SBA) to clarify confusion between the initial six-month deferral period and the extended 10-month deferral period.

Early PPP borrowers were allowed a six-month deferral period before repayment of the loan had to begin. The Paycheck Protection Flexibility Act, which became law in June, extended the deferral period to 10 months. But some PPP borrowers who received their loans prior to the extension had received notice from their lenders that their six-month deferral period had ended, and that repayment must begin.

PPP lenders must comply with the extended deferral and notify borrowers of the change. No formal modification of promissory notes is required.

Despite the extended payment deferral, PPP loan forgiveness and repayment requirements are complex, including the tax treatment of PPP proceeds. For additional information or assistance in managing your PPP loan please contact Gray, Gray & Gray at (781) 407-0300.

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