The AICPA’s vice president for Firm Services, Lisa Simpson, CPA, CGMA, testified Wednesday before a congressional committee that Congress needs to extend the Paycheck Protection Program (PPP) application deadline by at least 60 days due to urgent challenges small businesses, their CPA advisers, and lenders are facing with the $284.5 billion program.

In remarks before the House Committee on Small Business and in written testimony, Simpson detailed several problems that are hindering the ability of many applicants to receive needed PPP funding.

Among the issues raised:

• PPP application validation errors and hold codes that are difficult to decipher and resolve because they occur in the digital interface between lenders’ and the SBA’s platforms.


• At least 65 error codes and validation checks, many of which may ultimately be incorrect, that can take up to six weeks to resolve.


• Delayed SBA guidance and new forms enacting changes in the maximum loan amount for small business owners who report their income on Schedule C, Profit or Loss From Business, of Form 1040, U.S. Individual Income Tax Return, coupled with lenders’ need to update their systems. This leaves little time for small borrowers to submit an accurate loan application, resolve any issues encountered in the SBA processing system, and obtain a PPP loan — all while operating their businesses.


• Inequitable treatment of many borrowers who had previously applied for and received a PPP loan but cannot retroactively increase the loan amount to benefit from the changes to the maximum PPP loan amount for Schedule C filers.

Simpson was one of four panelists who addressed the committee during a two-hour hearing. The other three panelists, who represented community development financial institutions (CDFIs), community banks, and a Latina-owned party-planning business, echoed Simpson’s concerns about the March 31 deadline, the processing delays in the SBA system, and the impact of the changes to the PPP maximum loan calculations for Schedule C filers.

Of particular concern related to the deadline issue was the current SBA policy that only PPP loans processed by March 31 will be funded. Panelists and some members of the committee characterized that policy as unfair to small businesses that enter applications into the SBA system before March 31.

Panelists and committee members also referenced the decision of several national banks to no longer accept PPP applications because the March 31 deadline is so close and so many applications remain in limbo due to automated validation checks with the SBA’s PPP processing system.

In response to a question, Simpson said that the problems lenders and borrowers are having moving applications past error codes could be addressed by the SBA’s providing more clarity on what each error code means and on what steps must be taken to resolve them. Other panelists stressed the need for additional SBA staff who can provide live answers to questions.

Panelists provided examples in line with the AICPA’s position that the loan calculation changes for Schedule C filers should be made retroactive.

Hilda Kennedy, founder and president of AmPac Tri-State CDC, a CDFI in Ontario, Calif., provided an example quantifying the impact of the change from net profit to gross income in calculating PPP maximum loan amounts for Schedule C filers. The maximum loan amount available for a Latina-owned party-planning business went from $2,000 to $20,000 with the change to gross income.

Alice Frazier, president and CEO of the Bank of Charles Town, a $620 million asset community bank in Charles Town, W.Va., told of a bank customer who files Schedule C and qualified for a $4,800 loan in the first round of the PPP last year. That customer’s business needed more money to maintain operations, so Frazier’s bank helped that business secure a separate $16,000 SBA loan.

If the loan calculation change to gross income from net profit had been in place when the business first needed the money, it would have qualified for the full $20,800 loan and also would have met the qualifications for loan forgiveness. Because the loan calculation was not made retroactive, the small business now has to pay off the $16,000 SBA loan it would not have had to take out under the current rules.  

Asked how much time would be needed to resolve the error codes and allow more time for Schedule C filers to apply for PPP loans, Kennedy and Frazier said that they believe 60 to 90 days would suffice.

It was not clear from committee member remarks how many support delaying the PPP deadline and/or making the loan calculation change for Schedule C filers retroactive, though committee Chair Nydia Velázquez, D-N.Y., did say in opening remarks that the deadline should be extended, and Rep. Andy Kim, D-N.J., said toward the end of the hearing that he and Velázquez support making the loan calculation change retroactive.

Simpson’s testimony came the day after the AICPA sent a letter encouraging congressional leaders to push back the PPP’s March 31 application deadline at least 60 days.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.