The American Institute of CPAs has requested an extension of at least 60 days from Congress on the March 31 deadline for submitting applications for Paycheck Protection Program loans.
The AICPA urged Congress on Tuesday to extend the deadline, pointing out that many small businesses are encountering error codes when trying to apply for the loans and the Small Business Administration has not yet issued new rules for how underserved minority-owned small businesses can qualify under a recently unveiled program.
The SBA revived the PPP in January after Congress passed a COVID-19 relief package in December that included $284 billion in funding for the program, which provides forgivable loans to businesses that retain their employees during the pandemic. The latest round of funding was supposed to be more targeted toward small and minority-owned businesses that often found themselves outgunned last year by larger well-connected companies in applying for the initial round of loans as the big companies had existing relationships with lenders. The Biden administration even gave the smallest businesses a two-week period of exclusivity from Feb 24 through March 9.
The SBA added fraud checks this year to deter fake companies from exploiting the program, but the AICPA complained in February that the extra validation checks in the SBA’s E-Tran system were also generating a lot of false positives and holding up loans. The SBA pledged to remove the bottlenecks. Now AICPA president and CEO Barry Melancon is asking Congress for extra time on the program so accountants can help their small business clients.
“We thank Congress for its ongoing bipartisan support of the PPP, which is a valuable lifeline to millions of small businesses and nonprofits,” said Melancon in a statement. “However, too many small, underserved and minority-owned businesses continue to face serious challenges with the PPP application process. The accounting profession believes that Congressional action now to extend the looming deadline will help ease Main Street America’s anxiety and frustration.”
He pointed out that the system is still experiencing problems. “It is well documented that small businesses, nonprofits and the CPAs who advise them are experiencing error codes when submitting a PPP loan application,” Melancon noted. “We continue to provide input to the Small Business Administration (SBA) about these problems and are hopeful more progress will be made soon.”
The AICPA applauded the Biden administration’s efforts to make PPP more inclusive and accessible to underserved businesses. “However, these changes make it even harder for the smallest business entities — the self-employed and independent contractors — to meet the March 31 deadline,” Melancon added. “The SBA has not even released the new rules for these changes. A deadline extension of at least 60 days would enable these small, underserved businesses the time needed to understand these new guidelines and also give the SBA more time to correct these error code issues.”
The SBA revised its frequently asked questions guidance Wednesday on loan origination and the reopening of the loan forgiveness applications. The FAQs offered positive news for those pursuing second-draw PPP loans, confirming that “all Second Draw PPP Loan borrowers will be deemed to have made the required certification concerning the necessity of the loan in good faith.”
“From our conversations with the small business community, this FAQ alleviates significant concerns surrounding the ‘necessity’ for PPP Loans,” said Justin Elanjian, partner-in-charge of Aprio’s Paycheck Protection Program and Employee Retention Credit Services. “The update enables business owners to keep their focus on running their operations and maintaining their workforce, which is why the PPP was designed.”
The SBA also released an interim final rule Wednesday revising the loan calculation amount and eligibility. Among the changes, it will make it easier for the self-employed to get larger loans by using gross income rather than net profit when applying for loans.