PPP calculations guidance released

The U.S. Small Business Administration (SBA) and Treasury issued an 18-page document Tuesday detailing how Paycheck Protection Program (PPP) borrowers should calculate revenue reduction and maximum loan amounts for second-draw PPP loans. The guidance also lists the documents borrowers must provide to support each set of calculations.

The release came after SBA and Treasury issued three pieces of guidance over the weekend:

The second-draw calculations guidance is structured in the form of 24 questions and answers addressing a variety of situations involving different types of organizations. Eight questions deal with how to determine if a PPP borrower experienced the 25% decline in gross receipts required to apply for a second PPP loan of up to $2 million. The other 16 questions handle how a PPP borrower can calculate the maximum amount it is eligible to receive in a second-draw loan.

The guidance addresses a frequently asked question regarding the relationship between calculating gross receipts and the accounting method the borrower uses for its business. For a for-profit business, the guidance defines gross receipts as generally all revenue in whatever form received or accrued, which is determined in accordance with the borrower’s accounting method, i.e., accrual or cash.

Other topics covered include (among others):

The guidance explaining first-draw PPP loan calculations and documentation requirements covers 14 questions and answers. Among the topics covered are:

If an application error caused a PPP borrower to receive a larger PPP loan than it was eligible for, the SBA and Treasury have determined that the borrower may not receive loan forgiveness for any amount exceeding the allowed maximum, regardless of whether the borrower or the lender is responsible for the error. The borrower will be required to begin making payments on the remaining loan amount that’s in excess of the amount forgiven.

A borrower that is eligible to use SBA Form 3508S, but applied for loan forgiveness using PPP Loan Forgiveness Application Form 3508EZ or 3508, may resubmit its loan forgiveness application to its lender using SBA Form 3508S at any time until the SBA notifies the lender of a final SBA loan review decision or remits to the lender the PPP loan forgiveness payment. If a lender receives a timely borrower resubmission of a loan forgiveness application using SBA Form 3508S, the lender should promptly request the withdrawal of any lender loan forgiveness decision by notifying the SBA through the SBA Paycheck Protection Platform. Resubmissions are not allowed after the SBA notifies the lender of a final SBA loan review decision or remits the PPP loan forgiveness payment to the lender.

Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

AICPA experts discuss the latest on the PPP and other small business aid programs during a biweekly virtual town hall. The webcasts, which provide CPE credit, are free to AICPA members. Go to the AICPA Town Hall Series webpage for more information and to register.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.

Research & References of PPP calculations guidance released|A&C Accounting And Tax Services