WASHINGTON–While Treasury and SBA have released a loan forgiveness application form for the CARES Act’s Paycheck Protection Program (PPP), the document and related instructions leave a number of outstanding issues unaddressed and, more importantly, still do not provide enough flexibility for those who receive funds, according to the American Institute of CPAs.
The AICPA said the forgiveness application form does help address some administrative items such as providing additional clarity around “costs incurred but not paid” during the covered period, which is aligned with a recommendation by the AICPA. However, the group added, major issues remain, in particular, small businesses need flexibility on when the eight-week period should start or need to have the covered period extended to more than eight weeks.
“It’s clear the application form and instructions provided…are not enough,” said Erik Asgeirsson, president and CEO of CPA.com, the AICPA’s business and technology arm. “Some of the most pressing issues are not addressed and in other areas it appears new questions have arisen.”
Loan Forgiveness Calculator for PPP
Separately, the AICPA has created a loan forgiveness calculator for the Paycheck Protection Program (PPP). According to the AICPA, questions surrounding loan forgiveness have been a major stumbling block to successful PPP implementation, and the AICPA calculator is designed to resolve many of these issues.
The calculator is based on existing PPP guidance from the Treasury and SBA, as well as additional recommendations from the AICPA.
The AICPA said it has ties to 44,000 CPA firms, and they and their small business clients have been requesting loan forgiveness guidance since the start of the CARES Act implementation. If Treasury does not release guidance by May 15, the AICPA plans to post the calculator as a resource for its members and their clients.
“Our goal is to provide a consistent, commonly accepted approach to loan forgiveness calculations,” said Mark Koziel, the AICPA’s executive vice president of firm services. “Small businesses have been waiting for guidance and they can’t wait any longer.”
Three Sub-Categories
The AICPA loan forgiveness calculator is divided into three sub-categories: 1) non-payroll expense tracking, such as mortgage payments, rent and utilities; 2) FTE (full-time job equivalent) reduction, which tracks whether businesses shed any employees over the eight-week period; and 3) payroll accumulator, which helps small businesses capture the amount of eligible payroll costs and whether wages on a per employee basis declined in the eight-week covered period. These sub-fields are then used to make a loan forgiveness calculation.
The calculator relies on several assumptions contained in the AICPA’s recommendations, such as how to calculate FTEs and the aligning of the eight-week covered period with the beginning of a pay period, rather than the date the PPP loan proceeds were disbursed. These assumptions are noted in the calculator template, as is a disclaimer that, in instances where SBA guidance is unclear, a CPA’s judgment and interpretation of the act may be necessary.