H2R CPA Blog

Paycheck Protection Program (PPP) Loan Repayment Time Periods Modified

by Jeff Wolstoncroft, CPA

On October 7, 2020, the Treasury and SBA issued a new Frequently Asked Question (FAQ) to clarify a commonly asked question regarding repayment and interest on PPP loans. The FAQ #52 outlines that under the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act), the deferral period on interest and repayment was changed from 6 months after the loan date to the sooner of 10 months after your 24 week covered period or the date forgiveness is granted. The FAQ clarified that all PPP loans were modified by the Flexibility Act. Lenders are required to automatically apply the extension and notify the borrowers, but the loan documents are not required to be modified.

In summary, as a PPP borrower, you will not be required to begin repayment of loans until you are either granted partial forgiveness or 10 months plus 24 weeks from your loan date passes, whatever comes first. Of course, if full forgiveness is granted on the PPP loan, no repayment will be required, including on the accrued interest.

It is still unclear how partial loan forgiveness will impact accrued interest. The team at H2R CPA has requested guidance from the Treasury and SBA on how to handle accrued interest on a partial PPP loan forgiveness.

As always, if you need assistance with this matter, feel free to contact your H2R CPA liaison and they will be happy to assist you.