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Regulation and Compliance > Federal Regulation

CPAs Urge Lawmakers to Extend PPP Loan Application Deadline

By Melanie Waddell

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What You Need to Know

  • The PPP loan application deadline is March 31.
  • CPAs and borrowers face “urgent” tax and compliance challenges.
  • A move by Biden to temporarily limit applicants benefited women and minorities.

The American Institute of CPAs urged lawmakers Wednesday to extend the March 31 application deadline for the Paycheck Protection Program by at least 60 days, citing “urgent” tax and compliance challenges facing small businesses and CPAs.

“Significant operational problems [exist] within the PPP process that are resulting in urgent challenges and significant complexity for many small business borrowers who are trying to enter into the SBA system, and delays in processing once in the system,” Lisa Simpson, vice president of Firm Services at the AICPA, told members of the House Small Business Committee.

Extending the PPP application deadline for at least 60 days will provide an opportunity for the Small Business Administration “to address its technical issues, provide critical guidance, and work with lenders and borrowers so that small businesses can navigate the application process and receive a loan,” Simpson said.

The Federal Reserve Board on Monday said it will extend its Paycheck Protection Program Liquidity Facility by three months to June 30, to “provide continued support for the flow of credit to small businesses” through the PPP.

Rep. Nydia Velázquez, D-N.Y., chairwoman of the committee, said during her opening remarks that “one of Congress’ most effective means of distributing relief to small businesses was through the Paycheck Protection Program,” created through the CARES Act, to help small businesses “fully meet payroll costs and other business expenses.”

Today, Velázquez continued, “PPP is still providing urgently needed funding. The program accepts applications for first- and second-draw loans and has approved 2.1 million loans totaling $156.2 billion during 2021.”

Across the country, “case counts, hospitalizations and deaths are trending in the right direction,” Velázquez continued. “At the same time we are vaccinating millions of Americans daily. This is cause for optimism but it does not mean that this crisis is over. The pandemic has costs unprecedented harm for small businesses and it will be a mistake to withdraw [PPP] support abruptly.”

CPAs’ Concerns

Simpson told the lawmakers that along with challenges related to “front-end compliance checks” for new PPP loan applications when the program reopened in 2021, CPAs are also assisting clients with figuring out “the interplay between PPP and the Employee Retention Credit (ERC) to ensure compliance with both programs.”

“This is a complex issue and IRS guidance is still needed in some areas,” Simpson said.

Compounding that complexity, Simpson continued, “is that recent IRS guidance on March 1 for employers claiming the ERC for 2020 was issued after the filing deadline for 2020 payroll tax returns.”

The result: “CPAs immediately realized that many borrowers will now need to file amended payroll tax returns to access the business relief afforded to them by the ERC,” Simpson said.

Many CPAs “now must be learning about new IRS ERC guidance, adapting to changes in PPP guidance, assisting clients with the operational challenges of applying for PPP and working in another COVID-impacted tax season,” she said.

Simpson relayed to ThinkAdvisor Wednesday in a separate email that she “recently heard from a CPA who said that lawmakers need to understand that each PPP loan has a real person and real story behind it — and I couldn’t agree more. ” This “ puts a fine point on why the PPP application deadline should be extended by at least 60 days.”

The CPA’s “words also reinforce the great need to make the recent changes in loan amounts for IRS Form Schedule C filers retroactive to create equity among self-employed PPP draw borrowers regardless of when they applied for a PPP loan,” Simpson said.

Biden’s PPP Loan Limits Boosted Female, Minority Business Owners

The Biden-Harris administration announced in mid-February that from Feb. 24 to March 9 only businesses with fewer than 20 employees could apply for a PPP loan.

President Joe Biden said that the PPP application restrictions, which lasted for 14 days, were intended to aid the smallest businesses and “those that have been left behind in previous relief efforts.”

Ninety-eight percent of small businesses have fewer than 20 employees.

The SBA reported that as of March 7, a comparison of the daily average rate of loans made during the exclusivity period and daily average rate 10 days before the exclusivity period show loans to:

  • Minority-owned businesses up by 20%, or an additional 1,000 businesses accessing relief each day;
  • Women-owned businesses up by 14%, or an additional 600 businesses accessing relief each day;
  • Small businesses in rural areas up by 12%, an additional 1,000 businesses accessing relief each day.

“In total, more than 400,000 small businesses and nonprofits with fewer than 20 employees were serviced during the exclusivity period as of March 7,” the SBA reported. “Compared to the ten days preceding the exclusivity period, the reforms show that nearly 200,000 are first-time PPP borrowers — a 25% increase in daily approvals.”

Melanie Waddell

@Think_MelanieW

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