AICPA Offers Loan Forgiveness Calculator for Paycheck Protection Program
WASHINGTON - The American Institute of CPAs has created a loan forgiveness calculator for the Paycheck Protection Program (PPP), the main small business relief vehicle under the CARES Act, and shared it with the Treasury Department and Small Business Administration. Questions surrounding loan forgiveness have been a major stumbling block to successful PPP implementation, and the AICPA calculator is designed to resolve many of these issues.
The calculator is based on existing PPP guidance from the Treasury and SBA, as well as additional recommendations from the AICPA. Both the calculator and the underlying recommendations have been made in consultation with an AICPA-led small business funding coalition whose members provide services and support to businesses that employ more than 75 million people.
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 CARES Act implementation. If Treasury does not release guidance, the AICPA plans to post the calculator as a resource for its members and their clients.
“Our goal is to provide a consistent, commonly accepted approach to loan forgiveness calculations,” said Mark Koziel, CPA, CGMA, the AICPA’s executive vice president of firm services. “Small businesses have been waiting for guidance and they can’t wait any longer.”
Small businesses can have their PPP loans forgiven in full if the funds were used for eligible expenses over an 8-week period and other criteria are met. The amount of the loan forgiveness may be reduced 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.
The AICPA loan forgiveness calculator is divided into three sub-categories:
1) non-payroll expense tracking, such as mortgage payments, rent and utilities;
2) FTE (full-time job equivalent) reduction, which tracks whether businesses shed any employees over the 8-week period; and
3) payroll accumulator, which helps small businesses capture the amount of eligible payroll costs and whether wages on a per employee basis declined in the 8-week covered period.
These sub-fields are then used to make a loan forgiveness calculation.
The calculator relies on several assumptions contained in the AICPA’s recommendations, such as how to calculate FTEs and the aligning of the 8-week covered period with the beginning of a pay period, rather than the date the PPP loan proceeds were disbursed. These assumptions are noted in the calculator template, as is a disclaimer that, in instances where SBA guidance is unclear, a CPA’s judgment and interpretation of the act may be necessary.
For more information about the AICPA’s general resources for CPA firms on small business relief, please visit www.aicpa.org/SBA.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.
About the Association of International Certified Professional Accountants
The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 657,000 members and students across 179 countries and territories in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.