Guest Post: How to Account for PPP Loans

Have you taken a class from Jeff Sailor? He’s one of our favorites and one of the funniest. For more than 10 years, Jeff has served as an AICPA peer reviewer, focusing on small firms and sole practitioners. Jeff has managed his own accounting firm in Ocala, Florida, since 1984. During that time, he has also developed unique auditing approaches and auditing software.

To read more about Jeff or see his coursework, check here.

How to Account for PPP  Loans 

As many of you have been working very diligently to assist your clients with both acquisitions as well as forgiveness of the SBA PPP Loans, some of you have begun to wonder, “How in the world do I account for this loan and the possible forgiveness in the financial statements?”

The good news is that the AICPA has just issued a Technical Q&A to address this issue. It draws off existing standards to guide this unique situation. This guidance will apply to all nongovernmental entities, including both businesses and not-for-profit entities.

There are essentially three methods which may be followed depending on your type of entity:

  • Both businesses and not-for-profit entities may follow the standards related to debt.
  • A business entity may follow the guidance for a governmental grant, provided it is probable the loan will be forgiven.
  • A not-for-profit entity may consider it a conditional gift, provided it expects to have the loan forgiven.

I have created a short video below that goes into detail about how you should handle the accounting for all of these.

Stay healthy, Jeff Sailor

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Jeff Sailor, CPA, received a master’s degree in accounting from the University of Florida. Upon graduation, he joined the auditing staff at Peat Marwick in Jacksonville, Florida, where he worked on a large number of national accounts. Jeff has managed his own accounting firm in Ocala, Florida, since 1984. During that time, he has also developed unique auditing approaches and auditing software.

Since 1992, Jeff has been teaching accounting and auditing courses he developed to combat traditional “boring CPE.” Using a variety of creative teaching methods sprinkled with humorous video spoofs, Jeff is able to combine his in-depth accounting insights with humor in high-energy presentations. He’s also adept at presenting complex topics in a very practical, easy-to-understand manner, thus earning him rave reviews for more than 20 years. Jeff currently presents seminars, webcasts, and in-house instruction for Western CPE. He’s also a featured speaker at national conferences as well as at state and regional meetings.

For more than 10 years, Jeff has served as an AICPA peer reviewer, focusing on small firms and sole practitioners. He also served on the Resource Committee for the Private Company Financial Reporting Committee (PCFRC). Jeff has spoken at two NASBA national conferences on how to make education more engaging for practitioners.

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