How Does a Fractional CFO Help Your Small Business?
Fractional CFO’s have become increasingly important to most small businesses. Almost all businesses...
By: Shane Bender on Jan 4, 2021 7:00:00 AM
As you probably know, Congress passed, and President Trump signed a new $900 billion COVID-19 relief bill into law. I wanted to provide a quick recap of what this means for your business from a CFO's perspective.
The CARES act that launched the Paycheck Protection Program (PPP1) had some areas that were not clear that this new act has resolved. These are very good improvements.
The second Paycheck Protection Program (PPP2) has some differences. Here is a quick recap.
The revenue decrease provision is an interesting addition. This provision could be extra challenging for businesses on an accrual basis if you are close to 25% down for one quarter. Be very consistent in how you accrue revenue and be able to support it.
For those businesses that are cash basis, there might be a desire to push off depositing cash in the 4th quarter to make it look worse. If you can only show a decrease for one quarter and the 1st quarter of 2021 is very good or an increase, this could be construed as fraud. I suggest being as consistent as you can and not manipulate your numbers. It does not help you run your business better anyway and may be questioned.
I am glad they passed this legislation as it will help businesses that are struggling and make life much easier for those who already received forgiveness. They have made some improvements by learning from the holes in the first round. There will be more scrutiny for those businesses getting another round of funding, especially for larger amounts. It will be essential that businesses have current, consistent, and accurate accounting to support their need for forgiveness. If you want to know more, check out this article from the Journal of Accountancy.
Fractional CFO’s have become increasingly important to most small businesses. Almost all businesses...
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