The American Institute of Certified Public Accountants (AICPA) has released a calculator designed to help businesses who received Paycheck Protection Program (PPP) loans determine what portion of their loans are eligible for forgiveness.
The AICPA calculator incorporates all of the specific guidelines for loan forgiveness eligibility that were updated to date by the Small Business Administration (SBA) and the Department of the Treasury.
Businesses may be well-advised not to rush in applying for PPP loan forgiveness – yet – for the following reasons:
- The SBA and the Treasury are expected to release more FAQs addressing a number of unclear issues affecting PPP loan forgiveness. Applying for forgiveness without that information could lead a borrower to have less than the maximum possible forgiveness of a PPP loan. Major issues such as whether loan proceeds may be used for utilities, full-time equivalent rules, and how to properly calculate 2020 income for self-employed borrowers have not been resolved and can have a serious impact on a business’s eligibility for loan forgiveness.
- The loan forgiveness application has not been updated since a five-week extension in the PPP deadline (extended on July 4th to August 8th).
- Congress is now focused on a new round of COVID-19 relief which may include a new PPP-type initiative and/or provisions relaxing the forgiveness requirements.
- Even if a borrower does apply for forgiveness now, the SBA will not begin accepting PPP loan forgiveness applications from lenders until after August 10th.
- Under the PPP’s guidelines, applications for forgiveness may be submitted until 10 months after the covered period of the loan. Only at that point does a PPP loan convert to a loan that is ineligible for forgiveness.
Considering all of these factors, as a public accounting firm Lopata, Flegel is strongly advising clients who have received PPP loans to wait to apply for forgiveness until at least August 10th. Waiting for more information has no downside, rushing to apply could cost borrowers money.
We realize PPP loans have become increasingly complex, and will only become more so. For help completing your PPP loan forgiveness application or if you have any questions regarding the PPP or your business’s eligibility for loan forgiveness please email or call your Lopata, Flegel & Company contact, or call the firm at 314-514-8881.