The CARES Act – Troubled Debt Restructuring (TDR) Frequently Asked Questions

Published March 30, 2020

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The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act provides temporary relief from Troubled Debt Restructuring (TDR) provisions as described below.

Which banks are we discussing in this FAQ?

  • All Banks

What should banks do to accommodate borrowers during this crisis?

  • Banks should continue to work with borrowers during this time, deferring payments of principal or interest, and potentially lowering interest rates.

Will these restructured loans count as TDRs?

Not necessarily. This is how to address the restructured loans:

  • COVID-19 related impact:
    • The CARES Act suspends TDR as an election by the bank.
    • The impact to the borrower must be related to COVID-19 and the loan must have been current (not more than 30 days past due) as of 12/31/19.
    • Banks must make the election to suspend US GAAP for these modifications.
    • Maintain records of the volume of these loans:
      • We recommend adding a unique field in your core to identify these
      • Banking agencies may want to collect data on these later
  • Other three-month deferrals:
    • Other than COVID-19 related impact, you can make insignificant changes to the cash flow of the loan, deferring three months of payments on a loan that you otherwise expect to collect fully without lowering interest rates to a rate below market rates.
    • This will not be expected to result in a TDR.
    • Remember to document your conclusions in the loan file.
  • Other modifications:
    • Beyond the modifications above, these loans will have to be analyzed on a case-by-case basis.
    • Remember to document your conclusions in the loan file.

How long does the COVID-19 TDR exemption last?

The exemption begins March 1, 2020 and ends either on December 31, 2020 or 60 days after the national emergency terminates.

Do loans that receive payment accommodations have to be reported as delinquent or non-performing?

  • Borrowers under the COVID-19 exemption should be treated as current.
  • Borrowers past due prior to being affected by COVID should receive adjusted delinquency, to the status at the date the borrower became affected.
    • For example, if the borrower was 60 days past due at time of COVID, they would continue to report as 60 days past due during deferral period.

We’re here to help.

For more information on the CARES Act and temporary relief from Troubled Debt Restructuring, contact and a member of MCM CPAs & Advisors COVID-19 Solutions Group will be in touch.



Nothing in this document should be construed as providing tax advice.  Please consult with your own professional tax advisor.  In addition, this document represents the information that we have up to the date the presentation was made and cannot be relied upon for additional updates beyond that date.

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