Clara, a few things have changed since December. HUD issues an updated Q&A and the topic of the PPP/EIDL loans was addressed. Here is what they say:

Q2: Are Small Business Administration Paycheck Protection Program (SBA PPP) and Economic Injury Disaster (EIDL) loans subject to the normal HUD subordinate financing rules, including requiring payments from surplus cash?

A: The Department’s standard subordinate financing requirements must be followed for PPP and EIDL loans. For subsidized properties repayment can only come from surplus cash.

This question was updated on January 4^th of 2021. So, it appears that the latest iteration indicates it is noncompliance. I am still a little wary to report this as a finding. Non one is sure what to do. IN reality it looks like a finding. I am not sure what will happen when all oof these get reported.

As far as the COAs is concerned, it depends on whether the client has  Section 8 contract or not. As you can note above, with Section 8 repayment is supposed to come form surplus cash. In a mortgage situation it does not. So, I would pick either of the following:

               2323 – Other Loans and Notes – Surplus Cash (if there is Section 8)

               2324 – Other Loans and Notes (no Section 8)

If you are sure about forgiveness, then I would NOT use the 2323 as when it is forgiven, the reduction will trigger a surplus cash review item when in reality it was just forgiven.