AICPA Offers Recommendations for Loan Forgiveness Under Paycheck Protection Program

 – April 29, 2020
AICPA Offers Recommendations for Loan Forgiveness Under Paycheck Protection Program

The American Institute of CPAs (AICPA) has released recommendations on the appropriate documents and calculations that small businesses should use to qualify for loan forgiveness under the CARES Act’s Paycheck Protection Program (PPP).

The recommendations were made in consultation with an AICPA-led small business funding coalition, CPA firms and other key stakeholders. They build on previous guidelines the AICPA has provided to help bring clarity to the implementation of the PPP.

Among other suggestions, the AICPA urges that:

  • The 8-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received.
  • The 8-week period should commence 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 equivalents (FTEs) 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 small businesses’ average payroll 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 Mark Koziel, the AICPA’s executive vice president for firm services. “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 full set of the AICPA’s recommendations, including those that apply to the application process, can be found here. The loan forgiveness recommendations are contained in Parts 2 and 3 of the document.

The AICPA also has a resource page to assist CPA firms on PPP issues.