The AICPA issued a news release Thursday afternoon renewing the organization’s call for the swift passage of legislation to extend and expand the Paycheck Protection Program (PPP).
The PPP funded more than 5.2 million loans for a total of $525 billion but stopped accepting new applications on Aug. 8. The program closed with almost $134 billion of congressionally approved funds remaining unspent.
“Money still remains unspent from the last PPP authorization, but businesses can’t currently tap those funds,” said Erik Asgeirsson, president and CEO of CPA.com, the AICPA’s business and technology arm. “We need to allow new loan applications and add additional resources to help small businesses during this critical time. We support efforts to enact PPP 2.”
PPP 2 is an unofficial name referring to a new, more targeted small business assistance program that has been discussed among congressional leaders and White House officials for weeks. While new funding to help small businesses deal with COVID-19 pandemic-related business disruptions has bipartisan support, disagreement between Democrats and Republicans on other aspects of a new stimulus bill has so far prevented a deal from being reached.
In its news release, the AICPA said that while the PPP proved to be an effective bridge for many companies affected by workplace restrictions due to the pandemic, much more is needed. The Institute cited a CNBC report that date from the restaurant and services review site Yelp that showed a 34% increase in business closures since mid-July. In addition:
- Politico, citing Drexel University statistics, reported that small businesses with 50 employees or less lost nearly 18 million jobs in the pandemic, with close to half of those jobs returning as states reopened — yet the recovery unmistakably tailed off in mid-June.
- Colder temperatures are expected to exacerbate challenges for restaurants, bars, and hospitality businesses, many of which will continue to face restrictions on indoor seating.
The AICPA also referenced its July 20 letter encouraging Congress to:
- Allow full deductions for PPP-related business expenses. The AICPA said the IRS contradicted Congress’s intent on April 30 in Notice 2020-32, which declared that no tax deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a PPP-covered loan.
- Provide information and tools to further simplify the PPP loan forgiveness application process. The AICPA supports proposed legislation that would require the U.S. Small Business Administration and Treasury to provide or certify free, publicly accessible PPP loan forgiveness calculators.
- Remove tax obstacles to remote work. The AICPA supports proposed legislation designed to balance states’ rights to tax income from work performed within their borders and the needs of individuals and businesses, especially small businesses, to operate efficiently.
- Allow Sec. 501(c)(6) associations and organizations access to the PPP. Not-for-profits organized under Sec. 501(c)(6) of the Internal Revenue Code are ineligible for assistance through the PPP. Many of these organizations are small, state-based, and regional entities — including state CPA societies — that are suffering from event cancellations and reduced meeting attendance.
- Provide additional federal fiscal relief to state and local governments. Without appropriate federal assistance, state budget shortfalls could trigger new state taxes on already struggling small businesses to close budget gaps, the AICPA said.
- Adopt new coronavirus-related liability provisions. The AICPA is calling for temporary and targeted liability protections for employers designed to prevent meritless coronavirus-related lawsuits against employers without diminishing key worker protections.
Asgeirsson made his remarks at the AICPA Town Hall, a regularly occurring virtual update that focuses on the PPP and related topics and draws an audience of as many as 5,000 CPAs. The AICPA issued six recommendations for pandemic-relief-related legislation in July, several of which touch on the PPP.
“From the beginning, we have advocated for the support of small businesses, their survival, and their ability to employ people,” AICPA President and CEO Barry Melancon, CPA, CGMA, said in the release. “It’s apparent that to increase the odds of many small businesses getting through this crisis, more governmental support is essential.”
Congress created the PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. The legislation authorized Treasury to use the SBA’s 7(a) small business lending program to fund loans of up to $10 million per borrower that qualifying businesses could spend to cover payroll, mortgage interest, rent, and utilities. PPP borrowers can qualify to have the loans forgiven if the proceeds are used to pay certain eligible costs. However, the amount of loan forgiveness will be reduced if less than 60% of the funds are spent on payroll over a loan forgiveness period of either eight weeks or 24 weeks.
AICPA experts discuss the latest on the PPP and other small business aid programs during its virtual town hall series. 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.