PPP Loan Deferral Period Extension and Promissory Notes: What You Need to Know
Posted on October 20, 2020
SBA PPP Loan FAQ Update: Extended Deferral Period and Promissory Note Modifications
The Paycheck Protection Program (PPP) was included as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP allocated funding of up to 10 million dollars per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities. The SBA, in consultation with the Department of the Treasury, has been providing additional guidance concerning the implementation of the PPP. On October 7, 2020, new guidance, FAQs, was released on the SBA website.
PPP Flexibility Act and Extended Deferral Period
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 SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period). Previously, the deferral period could end after 6 months.
Lenders and borrowers questioned if they were required to modify promissory notes used for PPP loans to reflect the extended deferral period.
We know things are hectic but remember to lean on your advisors (counsel, accountant) for insights they have, as many of these decisions in normal times are made infrequently.
We are here to answer your questions and assist in any way we can. We will be providing additional insights and updates as we move through this period of uncertainty.
About Keiter Advisors
Keiter Advisors is a full-service transaction advisory group serving companies in middle-market M&A transactions and financing. KA is recognized as the national leader in assisting owners to:
- Buy or sell foodservice distribution, meat processing and produce companies
- Plan and execute transition strategies, including family buy out initiatives and third party sale
- Examine the profitability of their business and develop viable improvement programs
- Renegotiate existing financing arrangements and secure new lenders
|Carroll Hurst||Scott Zickefoose||Alec Kendall|
|(804) 273-6204||(804) 273-6253||(804) 433-4185|
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