AICPA urges SBA and OMB to reconsider PPP loan necessity questionnaires
In response to a request for comment from the Office of Management and Budget (OMB) and the US Small Business Administration (SBA), the AICPA sent a letter on Wednesday in which it expressed concern that the new ” PPP loan necessity questionnaires (SBA forms 3509 and 3510) are cumbersome and do not represent the intention of Congress when it established the Paycheck Protection Program (PPP).
In the letter, AICPA emphasizes that PPP borrowers were required to make a “good faith attestation” of the need for the loan when applying for the loan.
“The CARES law requires that an eligible beneficiary certify that ‘the uncertainty of current economic conditions makes it necessary to apply for a loan to support the ongoing operations of the eligible beneficiary,'” the letter said. “The position of the AICPA is that the certification was intended to allow a borrower to self-assess their need for a PPP loan based on the economic uncertainty of which they were aware. when applying for a loan. As there was no way to predict how long the global pandemic would last, its severity, or the extent of the financial ramifications on the borrower’s operations, borrowers were asked to make a good faith determination of whether the loan was necessary. to maintain operations. . “
If agencies need more information about the need or suitability of a PPP loan, the AICPA letter recommends “that they require the borrower to provide a narrative statement and any documentation that the borrower can provide. considers it appropriate to demonstrate that the loan was essential to support its operations. “
“No one should forget that the purpose of PPP was to keep people on the payroll and tied to their businesses,” said AICPA President and CEO Barry Melancon, CPA, CGMA, in a statement. Press release. “When PPP became available, companies feared the worst, such as not getting paid by customers and not knowing when the economy or market for their goods and services would restart. For the SBA to look back several months longer. late to question why company took PPP aid is inappropriate. Borrowers had to decide whether to seek aid at the start of the pandemic without knowing what the rest of the year would look like. “
The new letter comes a week after AICPA was among 82 trade organizations that signed letters to Congress leaders and Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza suggesting that existing PPP pardon requests – in particular SBA forms 3508, 3508EZ and 3508S – should continue to be used in place of the new questionnaires.
More than 5.2 million PPP loans totaling $ 525 billion were approved in the five months the program accepted requests for assistance. About 30,000 of the loans were $ 2 million or more, according to the SBA report.
PPP in brief
Congress created the PPP under the $ 2 trillion CARES Aid, Relief and Economic Security (CARES) Act, PL 116-136. The legislation allowed the Treasury to use the SBA’s Small Business Loan Program 7 (a) to fund forgivable loans of up to $ 10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest. , rent and utilities.
PPP borrowers are eligible for loan cancellation if the proceeds are used to pay certain eligible costs.
The program ceased accepting nominations on August 8, with nearly $ 134 billion in unspent congressional approved funds. Allowing certain small businesses to access these funds is part of several PPP proposals that have been discussed between Congress and the White House, but nothing was passed as no agreement was reached on a draft. Comprehensive stimulus bill linked to COVID-19 in a controversial year election.
Congress designed forgivable loans to help support organizations facing the economic hardships created by the coronavirus pandemic and help them continue to pay employee salaries. PPP loan recipients may have their loans canceled in full if the funds are used for eligible expenses and other criteria are met. The amount of the loan forgiveness may be reduced based on the percentage of eligible costs allocated to non-salary costs, any decrease in employee numbers and decreases in wages or salaries per employee.
AICPA experts discuss the latest news on PPP and other small business support programs at a bi-weekly virtual town hall. The webcasts, which offer CIP credits, are free to AICPA members. Go to AICPA Town Hall Series web page for more information and to register.
the AICPA Paycheck Protection Program Resource Page houses resources and tools produced by the AICPA to help cope with the economic impact of the coronavirus.
For more information and stories on the coronavirus and how CPAs can handle the challenges of the outbreak, visit JofA‘s coronavirus resource page or subscribe to our email alerts for the latest PPP news.
– Jeff drew ([email protected]) is a JofA senior editor.