Lenders ought to account for the forgivable portion of a Paycheck Safety Program (PPP) loan as an interest-bearing loan till the receipt of cost for that loan from the US Small Enterprise Administration (SBA), in response to a Technical Query and Reply (TQA) posted Thursday by the AICPA.
The AICPA workers believes that for accounting functions, funds acquired from the SBA needs to be handled equally to funds acquired from the borrower. When cost is acquired from the borrower or the SBA (both in full or partially) earlier than the loan matures, quantities acquired needs to be accounted for as a prepayment, in response to TQA Part 2130.45.
In such conditions, unamortized loan origination charges needs to be accounted for in accordance with FASB ASC 310-20, Receivables, Nonrefundable Charges and Different Prices, the TQA states.
Further TQAs associated to lender accounting and the PPP can be found in TQA Sections 2130.41 by way of 2130.44.
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— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.