PPP Loan: Its impact on Financial Statements, Tax Reporting and Recasting

The Paycheck Protection Program “PPP” provided significant sums of money to businesses for the purpose of keeping their workforce employed during the COVID-19 crisis. Funds were provided by the Small Business Administration in the form of loans intended to ultimately be fully forgiven. Although guidance exists regarding how to account for funds such as the PPP, lack of awareness resulted in accounting errors and presentation issues in financial statements.

Understanding appropriate accounting requirements for a PPP Loan is critical for proper Financial Statement presentation. The accounting of a PPP Loan impacts tax reporting. Owner’s discretionary earnings can be easily overstated based on the accounting of a PPP Loan and also based on the business which received the PPP Loan. Problems with the accounting of a PPP Loan leads to due diligence issues and more important, incorrect business value results.

As a result of attending this course, participants will benefit from learning about proper PPP Loan accounting, how a PPP Loan impacts a tax return and how to recast owner’s discretionary earnings for a business that received a PPP Loan.