Are the SBA Loans Provided Under the CARES ACT Subject to Single Audit?

May 6, 2020

In response to the COVID-19 pandemic, the SBA has been providing loans to for-profit and nonprofit entities. The Paycheck Protection Program (PPP) loans, administered under the 7(a) guaranty loan program, are being provided through local financial institutions. The Economic Injury Disaster Loans (EIDLs) are disbursed directly from SBA. Many nonprofits have also received these loans and were unsure if they will be considered federal financial assistance and therefore subject to a Single Audit under Uniform Guidance.

On May 5, the AICPA Government Audit Quality Center (GAQC) informed us that they were advised by SBA regarding whether the PPP and EIDL loan programs are subject to Single Audit, and they were instructed as follows:

Not subject to single audit: SBA PPP loans provided to nonprofits are not subject to Single Audit.

Subject to single audit: Loans provided to nonprofits under the EIDL program are direct loans from SBA; as a result, they are considered federal financial assistance and are subject to Single Audit.

Therefore, nonprofit entities that did not receive any federal financial assistance or expend greater than $750,000 in their fiscal year are not subject to a Single Audit and do not need to include their PPP loan when determining if they will need a Single Audit.

However, nonprofits that received an EIDL loan would have to include the total loan amount received in determining if a Single Audit is required. If the total federal financial assistance including the EIDL program is greater than $750,000 in their fiscal year, they will be subject to a Single Audit.

Marks Paneth will continue to monitor developments and will provide updates as they become available. Contact your Marks Paneth advisor if you need additional information or assistance or email responseteam@markspaneth.com.     

Visit our Pandemic Resource Center for additional updates and guidance on the coronavirus (COVID-19). 

Download a PDF of our COVID-19 services.

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