United States

Borrower’s accounting for Paycheck Protection Program loans

WHITE PAPER

August 20, 2020 (Updated August 16, 2021)
 

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The Coronavirus Aid, Relief, and Economic Security Act established the Paycheck Protection Program (PPP), which is administered by the U.S. Small Business Administration (SBA), to provide loans to qualifying entities. Under this program, a qualifying entity may apply to an SBA-approved lender for a federally guaranteed loan to help offset certain payroll and other operating costs (e.g., rent and utility costs). The loan and accrued interest, or a portion thereof, is eligible for forgiveness by the SBA if the qualifying entity meets certain conditions. 

Because there is currently no specific guidance in U.S. generally accepted accounting principles that addresses the accounting when a business entity obtains a loan that is forgivable by a government entity, we have prepared a white paper, Borrower’s accounting for Paycheck Protection Program loans.  In this white paper, we discuss the following:

  • Business entities’ accounting for PPP loans 
  • Not-for-profit entities’ accounting for PPP loans
  • The views on accounting for PPP loans expressed by the staff of the U.S. Securities and Exchange Commission and the American Institute of Certified Public Accountants
  • The disclosures that borrowers should provide about any PPP loans received

For information about other financial reporting issues related to the coronavirus pandemic, refer to our white paper, Coronavirus: Financial reporting considerations. For additional resources related to the coronavirus pandemic, visit our Coronavirus Resource Center.

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