What is a temporary agreement to extend the maturity date of a loan known as?

A temporary agreement to extend the maturity date of a loan is commonly referred to as a short-term extension. This type of agreement allows a borrower to extend the period for which they are required to repay the loan, usually under specific circumstances, without having to restructure the entire loan. It offers flexibility to both the lender and the borrower, often serving as a solution to manage cash flow issues or unforeseen financial challenges that might prevent timely repayment. This approach helps maintain the relationship between the lender and borrower while ensuring that the loan is still honored, albeit with a temporary adjustment.

The other terms, while relevant in the broader context of loan management, do not specifically describe this kind of arrangement. For instance, a renewal typically implies a more formal process to reissue a loan with possibly new terms rather than just extending the current maturity date. Covenants generally refer to stipulations in loan agreements that borrowers must adhere to, and credit action encompasses various decisions a lender might take concerning a borrower's creditworthiness. Thus, the term short-term extension is the most precise answer for this scenario.