The Small Business Administration and Treasury Department tonight updated the Paycheck Protection Program FAQs to address the deferral period extension granted by the PPP Flexibility Act of 2020. The extension allows borrowers to defer payments of principal, interest and fees on PPP loans for 10 months.
In the FAQ, SBA and Treasury confirmed that the extension of the deferral period automatically applies to all PPP loans, and said that lenders should immediately notify borrowers of the change in the deferral period. Importantly, the FAQs note that “SBA does not require a formal modification to the promissory note,” and that “a modification of a promissory note to reflect the required statutory deferral period under the Flexibility Act will have no effect on the SBA’s guarantee of a PPP loan.”
Additionally, SBA informed all lenders in a letter on Tuesday that it has begun remitting PPP loan forgiveness payments. To ensure successful payment processing, lenders should recheck their institution settings within the PPP Forgiveness Platform, perform a final check of their submitted forgiveness decisions to ensure the forgiveness amount in the platform matches their records, and confirm their institution’s interest accrual method. Once the SBA initiates payment, lender authorizing officials can view details on the payment.