Creditors: How To Account For Pardonable PPP Loans

Creditors should account for the pardonable percentage of a Paycheck Protection Program (PPP) credit as an interest-bearing credit until the acknowledgment of payment for that credit from the United States Small Business Administration (SBA), as per the Technical Question and Answer (TQA) posted on Thursday by the AICPA.


The staff from AICPA are confident that for purposes of accounting, the received payments from the SBA ought to be treated in the same way as the payments received from the debtor. When payment is received (either in full or in part) from the debtor or the SBA prior to loan maturity, the cash received should be put on record for as an advance payment, based on TQA Section 2130.45.


In such cases, unamortized credit origination charges should be put on record for according to with FASB ASC 310-20, Nonrefundable Fees, Receivables, and Other Expenses, the TQA states.