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AICPA Creates PPP Loan Forgiveness Calculator

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The American Institute of CPAs developed a loan forgiveness calculator for the Paycheck Protection Program that it said Thursday was designed to help resolve many of the outstanding questions surrounding loan forgiveness that have proven to be a “major stumbling block to successful PPP implementation.”

AICPA said it shared the calculator with the Treasury Department and Small Business Administration, noting the calculator was based on existing PPP guidance from Treasury and SBA, along with additional recommendations from the AICPA.

If Treasury does not release guidance by Friday, the AICPA said it “plans to post the calculator as a resource for its members and their clients.” The calculator will be live Friday by 10 am Eastern Time on its website, AICPA said, adding there will be a tab on the home page for the calculator.

The calculator and underlying recommendations were made in consultation with an AICPA-led small-business funding coalition whose members provide services and support to businesses that employ over 75 million people, it said.

The AICPA 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 Coronavirus Aid, Relief and Economic Security (CARES) Act implementation.

“Our goal is to provide a consistent, commonly accepted approach to loan forgiveness calculations,” according to Mark Koziel, AICPA executive vice president of firm services. “Small businesses have been waiting for guidance and they can’t wait any longer,” he said in a statement.

Carl Peterson, AICPA vice president of small firm interests, pointed to five specific lingering concerns:

  1. Small businesses need clarity. “They need to know what the loan forgiveness calculation is so they can plan for reopening once their state lifts stay in place orders.”
  2. “They need to know how much of the loan might not be forgiven so they can determine if they can afford it and survive into the future.”
  3. “If part of the loan is not forgiven, it will have an impact on the business’ access to future capital or loans and if they have existing loans it has a negative impact on their existing loan covenants.”
  4. “Without flexibility in the start date of the 8-week covered period, it forces the business to spend loan funds before their state shelter-in-place orders are lifted. That means the business could end up without sufficient capital to reopen.”
  5. Some small businesses are “afraid to apply because there is not sufficient guidance in other areas as well, such as how do you calculate FTEs (full-time job equivalents) to determine loan forgiveness.”

Small businesses can have their PPP loans forgiven fully if the funds were used for eligible expenses over an eight-week period and other criteria are met, AICPA noted. The amount of the loan forgiveness could be lowered based on the percentage of eligible costs attributable to non-payroll costs, any decrease in employee headcount and decreases in salaries or wages per employee, it pointed out.

The AICPA loan forgiveness calculator is divided into three subcategories, it said: (1) non-payroll expense tracking, including mortgage payments, rent and utilities; (2) FTE job reduction that tracks whether businesses cut any employees over the eight-week period; and (3) payroll accumulator that 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. Those subfields are then used to make a loan forgiveness calculation, AICPA noted.

The calculator relies on a few assumptions contained in AICPA’s recommendations, including 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, it pointed out. Those assumptions are noted in the calculator template, as is a disclaimer that, in cases where SBA guidance is unclear, a CPA’s judgment and interpretation of the act may be necessary, it said.

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