CPA firms: It’s time to reset your approach to PPP

January 19, 2021 9:53 AM

The latest round of the Paycheck Protection Program should fully open today, with participation from lenders of all shapes and sizes. This gives CPA firms a great opportunity to reset the way they advise and serve their small-business clients regarding both loan applications and forgiveness.

We’ve come a long way from April, when the PPP was set up swiftly with limited and rapidly evolving guidance. Business relief advisory services have since become a major area of focus for firms, and CPAs have reaffirmed the essential role they play in supporting Main Street businesses.

What’s different now with the PPP, and how does that affect the way firms should approach their clients? Here are a few thoughts:

A broader range of businesses and nonprofits to serve

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There is new eligibility for first-time applicants such as chambers of commerce, housing cooperatives and local newspapers (subject to eligibility requirements). Reach out proactively to clients who may not have been able to participate in the first round of funding. Additionally, the hardest hit borrowers who received a PPP loan in the first round and who experienced a revenue decline of 25 percent or more in any quarter of 2020 (compared to the same quarter in 2019) may be eligible for a second-draw PPP loan.

The rules are well-defined this time

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There are more than a thousand pages of regulations on the PPP at this point. We’ve evolved to a situation very similar to tax return preparation, where software is essential for serving clients. Let tools do the work for you. For example, the CPA Business Funding Portal, a collaboration between the American Institute of CPAs, CPA.com and leading fintech Biz2Credit, has a free basic service with embedded guidance that allows firms to complete, process and fund client applications directly through the platform. It is also available at paid subscription levels where firms are eligible to receive agent fees. Bottom line: firms have lots of options on automated tools. Use them — don’t waste time reinventing the wheel.

Lenders have latitude around rules and processes

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PPP applicants may encounter lenders who require documentation or impose restrictions that aren’t called for in SBA regulations — in that instance, banks are in the driver seat. For that reason, it makes sense for CPA firms to advise their clients about the range of lender options. It may be easier for some clients to go with a traditional lender they used for their first draw PPP loan. In other cases, fintech lenders may make more sense. Whatever the choice, firms should have a centralized approach to deal with whichever type of lender best fits a client — and that goes back to the importance of having flexible tools in place.

There will be greater scrutiny of applications this time

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More fraud protections have been put in place to weed out ineligible companies and bad actors, and the Small Business Administration is committed to random review of some loan applications and forgiveness requests. As in the first round of the PPP, we recommend that firms have upfront conversations with clients about the “self-certification of need” and the risks of moving forward if this need does not exist.

The strategic implications will remain after the pandemic

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We should all recognize that CPA firms have built the equivalent of deep, 10-year relationships with clients over the past few months because of their standout work on business relief. This pandemic-related effort will continue through 2021, but it also strengthens an ongoing role for firms to assist clients with business funding decisions for the long term. The work you do now elevates that role.