AICPA-led coalition supports gross salary approach as the calculation standard for PPP loans


Small business financing led by AICPA coalition, in conjunction with the National Payroll Reporting Consortium, released a statement supporting the use of gross payroll based on 2019 data in the Paycheck Protection Program Pandemic Relief Loan application calculations. (PPP).

Applications were opened Friday for the PPP, which was funded by the $ 2,000 billion CARES (Aid, Relief and Economic Security) law, PL 116-136. PPP offers $ 349 billion in forgivable loans that small businesses affected by the coronavirus pandemic can use to cover costs, including wages and rent.

The United States Small Business Administration (SBA) released a 31-page document provisional final rule describing aspects of the PPP Thursday.

For the calculation of the average monthly salary cost, the AICPA-led coalition recommended in a statement released on Saturday that payroll service providers and CPAs use gross payroll based on 2019 data versus payroll. net (defined as gross payroll less federal withholding and FICA employee). Neither the CARES Act nor the SBA guidelines direct the PPP applicant to exclude federal withholding and FICA of employees for the period 2019. Average monthly salary cost includes gross payroll and other salary cost items. PPP defined such as healthcare.

The AICPA also said that its discussions with the Treasury, SBA, banks and payroll processors to resolve these and other issues are ongoing and that it will hold its members, coalition partners and small businesses aware of small business financing efforts..

Mark Koziel, CPA, CGMA, Executive Vice President of Business Services at AICPA, said:. This ensures that payroll taxes are not passed on to small businesses in need. In a program of this magnitude, guidance is expected to evolve and terms to be clarified.

The CARES Act established the PPP as a new loan option 7 (a) overseen by the Treasury Department and supported by the SBA, which is authorized to provide a 100% guarantee to lenders on loans issued under the program. The total amount of loan principal and accrued interest may be eligible for loan forgiveness if the borrower maintains or rehires staff and maintains pay levels. However, no more than 25% of the loan forgiveness amount can be attributed to non-salary costs.

Loan payments will be deferred for six months; however, interest will continue to accrue during the six month deferral. No guarantee or personal guarantee is required.

The program is available to small businesses that were in operation on February 15 with 500 or fewer employees, including nonprofits, veterans organizations, tribal groups, freelancers, sole traders, and independent contractors. Businesses with more than 500 employees in certain industries can also apply for loans, according to the SBA and the Treasury.

The app can be found here on the Treasury website.

Small businesses applying for PPP loans must submit documents, such as, but not limited to, payroll processor records or tax returns, that establish their eligibility for loans. The interim final rule released Thursday clarified that the SBA will allow lenders to rely on the borrower’s documentation to determine if the borrower is eligible for the loans. Lenders can accept electronic signatures and electronic consents. Lenders who comply with the obligations set out in the Interim Final Rule will not be held liable if the borrower submits fraudulent or inaccurate information.

Visit the AICPA Coronavirus Resource Center for information and resources related to the pandemic.

Kim nilsen ([email protected]) is the JofAthe editor of.


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