If you have specific questions not covered here, please ask on our Community page where you can engage with business experts and other small business owners. Overview of Paycheck Protection Program (PPP) Loan Forgiveness . We do not recommend or believe this approach will be widely used given the degree of uncertainty and complexity surrounding the PPP loan forgiveness process. I have received full forgiveness for the PPP. Changes to PPP forgiveness procedures, particularly the procedures for loans less than $150,000. Mike Batts, CPA . PPP Loan Forgiveness Calculation Form . Instead, you must certify that you … 12/8/20 – Bryan Pautsch. The SBA recently released its PPP Loan Forgiveness Application form. 3. It is best to consider showing the PPP loan forgiveness in a separate segregated line-item so regular grant support can be observed on its own. As many nonprofit organizations have received PPP loan funds and will be requesting loan forgiveness, we wanted to share a couple of articles with our clients that discuss the accounting for these funds. QUESTIONS REGARDING ACCOUNTING FOR PPP LOANS AND FORGIVENESS? Share Article. If an organization has no intention of applying for forgiveness or it is aware that total forgiveness will not be achieved, the consensus is that a nonprofit should record the PPP Funds as a loan. This issue is top of mind for many NFPs that received PPP loans. Now that the banks that originated many of the PPP loans are faced with processing forgiveness applications for real, they’d like to cut to the chase. Loan Forgiveness Application Revised June 16, 2020 . You … Loan (ASC Topic 470-50) – if an enterprise elects to treat the PPP loan as a debt, it can be derecognized only upon formal forgiveness of the debt by the lender (SBA) or repayment of the debt. Detailed financial statement disclosures are recommended with this method as well. Under this approach, the cash inflow from the PPP loan is recorded as a refundable advance. The simplest of the forms, form 3508S is only for borrowers with loan amounts of $150,000 or less. Visit 501 Commons PPP Loan Forgiveness for additional information on tracking and managing your PPP loan to maximize loan forgiveness. An application for PPP loan forgiveness is submitted before the end of the 2020, or at the end of the 2020 tax year the business intends to submit an application for PPP loan forgiveness in 2021. Along with your loan forgiveness application, you will need to provide proof of how you spent your PPP loan. YES NO B. How is the process of applying for a PPP loan different for a nonprofit? The SBA advises the following steps in completing an application for loan forgiveness. Due to the extension of the covered period under the Flexibility Act, it is anticipated that this will be rarely seen as it should be easier for organizations to meet the eligible requirements. Conditional contributions are recognized as income when the condi­tions on which they depend are met. The AICPA issued technical guidance for accounting for a Paycheck Protection Program (“PPP”) loan for nongovernmental entities (including not-for-profit entities).. It may be reported as a separate component of income, or it may be shown as a reduction to the qualifying expenses. Second round PPP loan eligibility and procedures. Nonprofit organizations nationwide have been anxiously awaiting clarity amidst fears that forgiven loans may NOT be reported as government grants and negatively affect the organization’s public charity status. PPP Loan Forgiveness – A Summary of Available Guidance . OMB Control Number 3245-0407 Expiration Date: 1. Filling it out will require no calculations or documentation (but the SBA can request documents at any time). Under most guidance, PPP loan forgiveness is presented as a separate component of income on the statement of operations for business entities or the statement of activities for nonprofit organizations. By . Some borrowers can file SBA Form 3508 EZ or 3508S, which are shorter applications than the Form 3508 that many borrowers will file. By Bruce L. Blasnik, CPA, CGMA, Partner. The SBA has announced that it will begin accepting Make a new Other Income account, called PPP Grant Forgiveness, (or XYZ Grant Forgiveness, or name of other grant). You will need to be aware of 2 core categories: “payroll” and “other business expenses.” To get the forgiveness we all hope you will achieve, it’s vital that you stick to these approved uses and within the amounts stipulated by the SBA (more on that in a bit). Now you need to reduce the Loan, so DR PPP Loan, and CR PPP Grant Forgiveness. To learn more, visit the … Government Grant Recipients Face an Uncertain Road to PPP Loan Forgiveness. Nonprofit organizations (“nonprofits”) that receive significant amounts of federal and state grant funding (“government grants” or simply “grants”) are likely to face challenges in maximizing the benefits of their Paycheck Protection Program (PPP) loans. Originally published May 19, 2020; Revised through July 21, 2020 . Here are the most recent requirements to apply for PPP forgiveness. Update: CARES Act section 1106(i) specifically excludes any amount of PPP loan forgiveness from inclusion in taxable income, including unrelated business taxable income.Accordingly, a church or other nonprofit organization that receives full or partial PPP loan forgiveness is not required to report the loan forgiveness amount as taxable income on Form 990-T. And then, there is the issue of how to report the PPP loan and its potential forgiveness in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP). Are the PPP rules still changing? End result, PPP Loan is zero, and Other Income shows as a … We are providing highlights and examples from the form below to help guide you through the process. $ 3. I also recorded the PPP as a long term liability: Credit to PPP Loan Long term liability account and Debit to Bank Account when the loan was originally approved. : 3245-0407 Expiration Date: 7/31/2021. PPP Loan Forgiveness Application Form 3508EZ Revised January 19, 2021 SBA Form 3508EZ (01/21) Page 2 . Revised July 21, 2020, to reflect substantial changes made by the Paycheck Protection Program Flexibility Act of 2020 and related SBA guidance . IAS 20 is more flexible on how the income is reported. Business Legal Name (“Borrower”) DBA or Tradename, if applicable Business Address Business TIN (EIN, SSN) Business Phone ( ) - Primary Contact E-mail Address . The PPP loan participant is notified by their lender in 2021 that forgiveness of all or part of their PPP loan is denied. SBA Form 3508 EZ is for borrowers with loan of $50,000 or … The guidance suggested that a nongovernmental entity (including not-for-profits, “NFP”) may account for the PPP loan as a financial liability in accordance with FASB ASC 470, Debt, if certain conditions are met. You will find great tools like a PPP Loan Forgiveness Tracker and a PPP Average FTE Calculator. 1) Account for the PPP loan as a financial liability in accordance with FASB ASC Topic 470, Debt. In their New Series, Vern and Sharon answer some common questions regarding PPP Loan Forgiveness. Contact your PPP Lender to obtain the correct forgiveness application. Each form is for a different loan use circumstance. Form 3508S. The PPP loan forgiveness specifications are strict when it comes to funds usage. In order to qualify for 100% PPP loan forgiveness, your business must meet several criteria. 1. initialing. PPP loans made on or after June 5 must have a minimum term of five years, rather than two years. View the recording of our recent webinar on PPP loan forgiveness and related tools (this information is current as of May 21). Important details about the application process for non-profit PPP loan applications ; FOR 2021, 501(c)(6) non-profits are now eligible! Remember, only funds spent on allowable expenses will be forgiven. A. 1 /202. loan forgiveness covered period of the PPP loan, has Borrower prepaid any outstanding debt (i.e., paid before contractually due)? We asked our trusted friends at Fiscal Management Associates to answer the burning nonprofit-specific Paycheck Protection Program questions on all of our minds. The guidance provides two alternatives for nonprofit organizations that keep their accounts in accordance with GAAP. Also consider moving the PPP loan forgiveness to below the line so you can show surplus or deficit from operations before and after forgiveness. Because PPP loan forgiveness is dependent on meeting certain conditions, it would be considered a conditional contribution. The key takeaway is that a nonprofit organization will have a … PPP Loan Forgiveness – A Summary of Available Guidance Originally published May 19, 2020; Revised through July 21, 2020 By Mike Batts, CPA Michele Wales, CPA Revised July 21, 2020, to reflect substantial changes made by the Paycheck Protection Program Flexibility Act of 2020 and related SBA guidance Overview of Paycheck Protection Program (PPP) Loan Forgiveness A borrower’s PPP loan … Changes in length of covered period for expenditure of PPP funds. How to seek forgiveness for a PPP loan. Michele Wales, CPA . Loan forgiveness was expanded from eight weeks of eligible costs to the 24 weeks or December 31, 2020, whichever is earlier; alternatively, a business whose PPP loan was made before June 5 may opt to use the eight-week period instead. If you are employed by a nonprofit or government and have student loan debt, you may be eligible for loan forgiveness, cancellation, and/or consolidation of federal student loans under the Public Service Loan Forgiveness program (PSLF). This guidance has been published to address accounting matters specific to Paycheck Protection Program (PPP) loan forgiveness and provide alternative accounting methods. Expansion of eligible expenses for use of loan proceeds and for forgiveness. Automatic Forgiveness on PPP Loans Looks Likely as Banks Push for It - Non Profit News | Nonprofit Quarterly If the answer to 2.A is YES, what was the total amount of all debt prepayments between March 13, 2020 and the end of the loan forgiveness covered period of the PPP loan? 2 /3. There are three PPP loan forgiveness application forms available from the SBA. Nonprofits: Impact of PPP Loan Forgiveness on Public Charity Status. One should reduce the refundable advance and recognize the … Also according to the CRRSAA Language that passed in December 2020 the forgiven PPP loan is completely tax exempt and is not taxable income. The entities, that are not governmental nor nonprofit, can treat the PPP loan as either 1) debt or 2) government grants. Your PPP loan is still listed on the books. By Signing Below, You Make the Following Representations and Certifications on Behalf of the Borrower: The Authorized Representative of the Borrower certifies to all of the below by . next to each one. PPP Loan Management and Forgiveness: A Timely Interview with FMA - Non Profit News | Nonprofit Quarterly This method is anticipated to apply for nonprofit entities. Provide supporting documentation. OMB Control No. Created under the College Cost Reduction and Access Act of 2007, PSLF allows borrowers who work full time for nonprofits and government