CPAs Give Lenders More Virus Relief Loan Accounting Guidance

Banks, credit unions, and other lenders offering government-backed forgivable loans to businesses should account for Small Business Administration payoffs similar to how they would treat customer prepayments, the American Institute of CPAs said.

When the government agency makes payments prior to the loan’s maturity, the money received should be accounted for as a prepayment, and unamortized loan origination fees should be accounted for in accordance with Financial Accounting Standards Board rules on receivables, as outlined in ASC 310- 20, Receivables—Nonrefundable Fees and Other Costs, the AICPA said in guidance released Friday.

The same guidance applies when a customer sends ...