AICPA makes recommendations for PPP loan forgiveness under coronavirus stimulus

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The American Institute of CPAs has offered a set of recommendations for how small businesses that received loans from the U.S. Small Business Administration under the federal government’s Paycheck Protection Program can have their loans forgiven if they have retained their employees for eight weeks during the novel coronavirus pandemic.

The Small Business Administration reopened the PPP on Monday after receiving a fresh round of $320 billion in funding from Congress last week. The initial funding of $349 billion ran out within days after the SBA opened the program earlier this month in a bid to keep small businesses afloat and their employees on the payroll. However, many small businesses again had trouble submitting their loan applications this week because the portal was often down throughout the day and have complained that the applications they managed to submit last time have been on hold awaiting approval.

The program has been a target of criticism because many of the loans have gone out to large organizations and publicly traded companies instead of the small businesses that it was supposed to benefit. Companies like Shake Shack, Ruth’s Chris Steakhouse and the Los Angeles Lakers have agreed to return the loans they received.

For the second round of funding, the SBA and the Treasury Department have pledged to ensure the loans will only go out to small businesses that qualify for the program. They have also promised to audit the loans to make sure the terms were met and have now prohibited the use of robotic process automation technology to submit the loans. The SBA has been flooded this week with applications from banks that have been able to leverage RPA technology to get their clients’ loan applications submitted ahead of competitors.

The AICPA made its recommendations in conjunction with an AICPA-led small business funding coalition, CPA firms and other key stakeholders. They build on earlier guidelines the AICPA has offered to bring clarity to the implementation of the PPP.

Among other suggestions, the AICPA recommended that:

  • The eight-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received.
  • The eight-week period should begin once local stay-at-home restrictions are lifted, not when loan proceeds are received, so small businesses have adequate funds to ramp up operations.
  • Full-time job equivalent (FTE) employees can be calculated using a simple wage-based proxy when hours worked are not tracked by the employer.
  • Payroll reduction calculations should be based on average payroll per employee per week, not total compensation per employee.

“Loan forgiveness is a key element of the Paycheck Protection Program, and the steps for qualification should be simple, straightforward and designed to help small businesses succeed,” said AICPA executive vice president for firm services Mark Koziel (pictured) in a statement Wednesday. “Our goal is to continue to work with our coalition and other stakeholders to help drive consistency and a standard approach for the smaller entities that are now applying.”

The complete set of recommendations can be found here.

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AICPA Small business Coronavirus Mark Koziel SBA