A PAYCHECK PROTECTION program designed to help keep Americans employed in the wake of the ongoing coronavirus pandemic ran out of money on Thursday, as partisan differences have held up the allocation of additional funds to help America's small businesses stay afloat.

The Small Business Administration on Monday issued a statement on its website indicating that it "is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding." In less than two weeks, the $349 billion initially allocated to the program has been exhausted.

"We need to extend that support so we can protect workers and ensure our economy can rebound quickly once restrictions are lifted," Barry Melancon, president and CEO of the American Institute of CPAs, said in a statement on Thursday morning.

The program was designed to backstop banks and lenders granting loans to small businesses while their operations are locked down by state-mandated nonessential business closures. Provided any loans awarded to such firms go toward supporting worker salaries and keeping employees on the payroll – with some exceptions – some or all of those loans would be forgiven through the SBA.

But the initial $349 billion was never expected to be enough to provide long-term and meaningful support to small businesses across the country that have either shut down or drastically altered their business models in the wake of the coronavirus outbreak. Last week and during the three weeks prior, roughly 22 million Americans filed initial unemployment claims. That's roughly equivalent to all of the jobs that the country gained during its historic economic expansion after the Great Recession, erasing progress built between late 2010 and February 2020.

President Donald Trump's administration has been ramping up pressure in recent days to reopen at least portions of the domestic economy from lockdown measures implemented to prevent the spread of the coronavirus. As of Thursday morning, more than 639,000 Americans are confirmed to have been infected with the disease. More than 30,000 have died.

Several governors are now considering plans to partially lift lockdown measures in their states in the coming weeks – though many are expected to do so only gradually to prevent a spike in infection counts. Widespread social distancing measures are expected to remain in place throughout much of the country for at least the next several weeks.

Lawmakers on both sides of the political aisle have recognized the need to allocate further funds to the paycheck protection program, but progress has been stalled by differences over how the federal dollars should be spent. Senate Majority Leader Mitch McConnell of Kentucky has been pushing for an infusion of more than $250 billion into the program, blaming Democrats for slow progress. But Democratic lawmakers have blocked that approach, instead calling for a $500 billion package that would also funnel additional money to hospitals and state and local governments.

Discussions are ongoing between Republicans, Democrats and Treasury Secretary Steven Mnuchin. But business owners and economists warn that time is a critical factor in getting funding to small businesses across the country.

"Just yesterday, we released new data that 90% of small businesses have been impacted by COVID-19 with a large percentage reporting a severely negative impact," John Arensmeyer, founder and CEO of the Small Business Majority advocacy organization, said in a statement on Wednesday. "While it is clear that PPP is not a long-term nor an efficient solution, Congress must immediately add robust funding to keep it solvent, and not delay any further in providing direct cash grant assistance to the smallest, most vulnerable businesses."

With many small business owners in danger of running out of cash as their businesses remain closed in the coronavirus crisis, fintech companies are lobbying to disperse government relief funds to them.

Some say that using the digital platforms they have developed to lend money and process payrolls will be quicker than going through traditional Small Business Administration (SBA) procedures for disaster relief.

The current hotly debated Republican economic relief package bill, under which the SBA would disseminate aid to small businesses, along with relief to workers and big companies, gives the agency 30 days to determine relevant rules before it starts accepting applications for capital. Many in the small business community say that by that point, many businesses, particularly very small ones with inadequate cash reserves and no money coming in, will already have closed. 

The American Institute of CPAs (AICPA), the International Franchise Association, payroll processor Paychex and accounting software provider Intuit, issued an open letter to President Trump, U.S. Treasury Secretary Steven Mnuchin, Small Business Administrator Jovita Carranza and members of Congress today that called for the government to disperse funds to employer businesses through existing payroll processors. 

“We urge the federal government to use these existing systems to direct funds to small businesses so they can make payroll and not shut down due to restrictions caused by the pandemic,” they said in a statement. “In this scenario, the federal government could set up a central payroll funding account that small business payroll processors could utilize so that millions of small businesses could continue paying workers during this time of crisis.”

However, as the group noted, this help would apply only to employers. The vast majority of all small businesses are nonemployer firms, meaning they are solo firms or partnerships that have no employees on payroll.

WASHINGTON, DC (April 4, 2020) – For the calculation of the Average Monthly Payroll cost under the Paycheck Protection Program (PPP), the Gross Payroll approach should be used for the application, according to the recommendation from the AICPA-led small business funding coalition. This recommendation was developed in conjunction with the National Payroll Reporting Consortium (NPRC). It comes after the additional guidelines Treasury and the Small Business Administration (SBA) issued on Thursday.

For the calculation of the Average Monthly Payroll cost, we recommend that payroll providers and CPAs use Gross Payroll based on 2019 data versus Net Payroll (defined as Gross Payroll less federal withholding and employee and employer FICA). Neither the CARES Act nor the recent guidance instructs the PPP applicant to exclude federal withholding, employee and employer FICA for the 2019 period. The Average Monthly Payroll cost includes Gross Payroll and the other defined PPP payroll cost elements such as health care, etc.

“Treasury and the SBA have acted quickly to generate this small business stimulus. As key stakeholders in the implementation of the PPP relief, we are collectively working to drive consistency in the interpretation of the administration’s guidance. Our goal is to help produce an efficient application process to quickly get the funds in the hands of small businesses and their employees,” said Erik Asgeirsson, president and CEO of CPA.com.

Mark Koziel, CPA, CGMA, the AICPA’s executive vice president of firm services, added, “Based upon statements from members of Congress, it appears that the intent of the PPP was to base the salary calculation on gross wages with no adjustment for federal taxes. This ensures that payroll tax expenses are not passed on to the small businesses in need. In a program of this magnitude, it’s expected that guidance will evolve and terms will be clarified.”

The AICPA also said that its discussions with Treasury, SBA, banks and payroll processors to address these and other issues are ongoing and that it will keep its members, coalition partners and small businesses updated on the efforts to protect Main Street America.

About the American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.

Media representatives are invited to visit the AICPA Press Center at https://www.aicpa.org/press.

Group Urges Fast Distribution of Stimulus Funds Through Payroll Processors

WASHINGTON, D.C. (March 24, 2020) – More than a dozen new members have joined an American Institute of CPAs-led group advocating the use of payroll processors to quickly distribute governmental funds to small businesses so they can meet payroll and avoid layoffs.

The new members are: Alliance Payroll, Asure Software, BenefitMall, CheckWriters, Council for Electronic Revenue Communication Advancement, EmployCo USA, Green Dot, Gusto, OnPay, National Payroll Reporting Consortium, Paycom, Paylocity, PPI Business Services, PrimePay and Thomson Reuters.

They join the existing coalition of the AICPA, Paychex and Intuit and the International Franchise Association. All members have signed the following open letter:

About the American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession.

About the Association of International Certified Professional Accountants

The Association of International Certified Professional Accountants (the Association) is the most influential body of professional accountants, combining the strengths of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to power opportunity, trust and prosperity for people, businesses and economies worldwide. It represents 657,000 members and students across 179 countries and territories in public and management accounting and advocates for the public interest and business sustainability on current and emerging issues. With broad reach, rigor and resources, the Association advances the reputation, employability and quality of CPAs, CGMAs and accounting and finance professionals globally.

The American Institute of CPAs (AICPA), along with the International Franchise Association and payroll processing companies Paychex and Intuit, are asking policymakers to help small businesses make payroll during the coronavirus pandemic.

“As the federal government focuses its attention on America’s economic engine — small businesses and their millions of employees — direct funding of their payroll can help,” the group said in a letter. “The problem: It takes time to create new processes to distribute funds to small businesses — speed is of the essence here. An efficient and effective process would be to leverage established small business payroll processing that is already in place and can be marshalled immediately to protect jobs and preserve resiliency within the small business sector.”

The group said about 60 million people in the United States are employed by small businesses, and payroll processors account for roughly 40% of all payroll payments in the United States.

“We are also convinced that proposed direct payments to individuals will not prevent small businesses from laying off employees. Small businesses need to make payroll now – the clock is ticking,” the letter said.

The letter is addressed to President Donald Trump, Treasury Secretary Steven Mnuchin, Small Business Administrator Jovita Carranza, and members of Congress.

Last week, Moody’s Analytics said nearly 80 million jobs in the United States are at high or moderate risk due to the impacts of the coronavirus. The President and chief executive officer of the Federal Reserve Bank of St. Louis, James Bullard, on Sunday said he thought U.S. unemployment could hit 30% in the second quarter.

Initial unemployment claims jumped 33% last week, the biggest week-over-week jump since the 2008 financial crisis.

“The payroll processing companies and the 45,000-plus CPA firms in America have long been partners in helping small businesses thrive in good times, and we have a role to play in the grave challenges we face today,” the group said in its letter.

It is also urging the creation of a central payroll funding account that small business payroll processors could use to allow small businesses to continue paying workers.

The number of confirmed coronavirus cases had jumped to more than 33,000 in the U.S. Monday morning, with more than 20,000 cases in New York.