Accounting for Paycheck Protection Program Loans
Paycheck Protection Program (PPP) loans have played a critical role in helping businesses and not-for-profits respond to the economic crisis resulting from the COVID-19 pandemic. Both the popularity and the unique provisions of the program in the Coronavirus Aid, Relief, and Economic Security (CARES) Act have made these loans a frequent topic of discussion. In addition, the loans have raised many questions regarding the financial statement presentation.
When it comes to accounting for a PPP loan, individuals are often surprised to learn that there are multiple options available. The accounting will depend most significantly on the possibility of loan forgiveness, but will also be influenced by other important factors such as whether the entity receiving the loan is for-profit or not-for-profit and if financial statements are filed with the Securities and Exchange Commission (SEC).
To help borrowers with the accounting of your PPP loan, we have partnered with CICPAC to provide the following whitepaper, Paycheck Protection Program: The Accounting Options.
PPP Loan Accounting Whitepaper
In this whitepaper, the CICPAC Thought Leadership Committee provides an overview of the four options that can be used to account for the PPP Loans. The committee has also provided several examples of financial statement presentation, disclosures to be included in the financial statements and sample wording to be included in the management representation letter. The final section of the whitepaper provides some additional things to consider when accounting for the PPP loans.