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PPP - Ensuring it is for Small Business

Updated: May 6, 2020

The PPP (Paycheck Protection Program) has been criticized because many of the loans have gone to large organizations and publicly traded companies instead of the small businesses that it was supposed to benefit. Social media pressure came to some of those companies, such as: Shake Shack, Ruth’s Chris Steakhouse and the Los Angeles Lakers, and those companies have agreed to return the loans they received.

For the second round of funding, the SBA and the Treasury Department pledged to ensure the loans will only go out to small businesses that qualify for the program. Both groups have promised to audit the loans to make sure the terms were met and have now prohibited the use of robotic process automation technology to submit the loans. The SBA has been flooded with applications from banks that have been able to leverage RPA technology to get their clients’ loan applications submitted ahead of competitors.

Accounting Today notes that the AICPA made its recommendations in conjunction with an AICPA-led small business funding coalition, CPA firms and other key stakeholders. They build on earlier guidelines the AICPA has offered to bring clarity to the implementation of the PPP.

Among other suggestions, the AICPA recommended that:

  • The eight-week covered period under PPP should align with the beginning of a pay period, not the date loan proceeds are received.

  • The eight-week period should begin once local stay-at-home restrictions are lifted, not when loan proceeds are received, so small businesses have adequate funds to ramp up operations.

  • Full-time job equivalent (FTE) employees can be calculated using a simple wage-based proxy when hours worked are not tracked by the employer.

  • Payroll reduction calculations should be based on average payroll per employee per week, not total compensation per employee

Click here for the complete set of recommendations.

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