The U.S. Small Business Administration (“SBA”) has two loan programs to help small business impacted by COVID-19: Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”). An eligible business can get both of these loans and use the funds at the same time, provided that it does not use them for the same purpose.

As of June 15, the EIDL is now re-opened to all eligible small businesses. Compared to PPP loan which has very narrow permitted use of payroll costs and certain permitted non-payroll costs such as payments for utilities, rents, and mortgages, funds from EIDL can be used for financial obligations and operating expenses that could have been met had the disaster not occurred.

Eligible small business with employees less than 500 can apply for the low interest loan directly with the SBA. The maximum loan amount is $2 million (though the SBA has been unofficially capping the amount at $150,000 due to the high volume of applications it has received) and the interest rate is 3.75%. Loans are offered with long-term repayments to keep payments affordable, up to 30 years, and terms are determined on a case-by-case basis.

Note that this loan program is different from the EIDL advance (which is granted $1,000 per employee up to $10,000 for qualifying employers).

Eligible small businesses can apply for the EIDL loan directly with the SBA, and it takes about 15 minutes to complete the application on-line.  Here is a link to the on-line application: https://covid19relief.sba.gov/#/

Assembly Bill 85 which includes provisions to suspend the use of California net operating loss deductions and certain tax credits for the tax years 2020 through 2022 was approved by both houses of the California legislature, pending the governor’s signature.  The bill was adopted in response to budgetary crises resulting from the COVID-19 Virus Pandemic.  Here are some key provisions contained in the bill:

NOL Deduction Suspension

For tax year beginning on or after January 1, 2020 and before January 1, 2023, net operating loss (NOL) use is suspended for both corporate and individual taxpayers with a net business income or modified adjusted income of $1 million or more, respectively.  The suspended NOLs’ carryover period will be extended by the number of years being suspended.

Tax Credit Limitation

Business tax credit usage is limited to $5 million for both corporate and individual taxpayers for tax year beginning on or after January 1, 2020 and before January 1, 2023.  The limitation does not apply to low-income housing credits and certain individual income tax credits.  The carryover periods are extended by the number of years that a credit is disallowed by the reason of this limitation.

PPP 대출에 대한 회계처리에 대해서 미국공인회계사협회 (AICPA)에서 Technical Question and Answer (TQA) 3200.18, 을 발표하였다.

지침서에 따르면, 정부회계와 비영리회계가 아닌 일반회계를 사용하는 기업의 경우에는 PPP대출에 대해서 대출 혹은 정부보조금으로 기록 할 수 있다. PPP에서 받은 돈을 대출로 기록하지 않는 경우에는 미국회계기준 958-605에 의거하여 조건부 보조에 대한 회계처리가 되어야 하며, 이를 위해서는 PPP대출이 실질적으로 상환감면이 될 수 있다는 요구조건을 충족하여야 한다.

자세한 내용은 다음에서 확인할 수 있다: TQA

The AICPA has released a Technical Question and Answer (TQA) 3200.18, (Borrower Accounting for a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program).

The TQA provides guidance with respect to accounting for PPP loans in accordance with US GAAP. According to the TQA, nongovernmental entities may account for PPP loans under FASB ASC Topic, 470, Debt, and that nongovernmental entities that are not nonprofit entities may account for the loans as government grants under certain circumstances. So, entities that are not governmental nor nonprofit should be able to treat the PPP loan as either 1) Debt or 2) government grants.

Entities that choose not to follow the Debt guidance should account for the loans as “conditional contributions” under FASB ASC Topic 958-605 if the entity expects to meet the PPP’s eligibility criteria and concludes that the PPP loan represents, in substance, a grant that is expected to be forgiven.

For more details, please refer to the TQA: