AICPA makes recommendations for cancellation of PPP loans as part of coronavirus relaunch

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

The Small Business Administration reopened the PPP on Monday after receiving $ 320 billion in new funding from Congress last week. The initial $ 349 billion funding ran out days after the SBA opened the program earlier this month in an effort to keep small businesses afloat and their employees on the payroll. However, many small businesses once again struggled to submit their loan applications this week as the portal was often down all day and complained that the applications they managed to submit the last time around were in progress. waiting for approval.

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

For the second round of funding, the SBA and the Treasury Department have committed to guarantee that loans will only be made to small businesses eligible for the program. They also promised to audit loans to make sure conditions were met and have now banned the use of robotic process automation technology to submit loans. The SBA was inundated this week with requests from banks that were able to leverage RPA technology to get their clients’ loan applications submitted ahead of competitors.

The AICPA made its recommendations in collaboration with a group led by the AICPA small business finance coalition, CPA firms and other key stakeholders. They build on previous guidelines that AICPA has proposed to clarify the implementation of the PPP.

Among other suggestions, the AICPA recommended that:

  • The eight week period covered under the PDP should be the start of a pay period, not the date the loan proceeds are received.
  • The eight-week period is expected to begin after local stay-at-home restrictions are lifted, not when loan proceeds are received, so that small businesses have sufficient funds to speed up their operations.
  • Full-time equivalent (FTE) employees can be calculated using a simple salary-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 part of the paycheck protection program, and the qualification steps should be simple, straightforward, and designed to help small businesses succeed,” said AICPA Executive Vice President for business services, Mark Koziel (photo) in a statement Wednesday. “Our goal is to continue to work with our coalition and other stakeholders to help foster consistency and a one-size-fits-all approach for smaller entities applying now.”

The full set of recommendations can be found here.

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