On October 7, 2020, the Small Business Administration (the "SBA") issued a new FAQ 52 clarifying how lenders must handle the change in deferral periods for loans made prior to the passage of the Paycheck Protection Flexibility Act (the "Flexibility Act"), which became law on June 5, 2020.

Under the Flexibility Act, the deferral period for loan payments is either (i) the date that the SBA remits the loan forgiveness amount to the lender or (ii) 10 months after the end of the borrower's loan forgiveness covered period if the borrower does not apply for loan forgiveness.

Prior to the passage of the Flexibility Act, the deferral period for loans made prior to June 5, 2020 was six months. The new guidance provides that the deferral period extension under the Flexibility Act automatically applies to all loans. No formal modification is required. However, lenders must notify borrowers of the change to the deferral period for loans made prior to June 5, 2020.

To review FAQ 52, click here.

For more information
If you have questions about the Paycheck Protection Program Flexibility Act or would like more information, please contact one of the following Bowles Rice attorneys: