Question: What Expenses Are Eligible For PPP?

What are qualified expenses for PPP?

Any interest paid on mortgage on property used for business purposes is an eligible expense that the PPP can be used for, and qualifies for forgiveness.

Acceptable examples include: Mortgage interest on a warehouse you own to store business equipment.

Auto loan interest on a car you own to make business deliveries..

What can PPP be used for?

The PPP loans are administered by the U.S. Small Business Administration (the “SBA”) and originated by third-party lenders. … [1] Proceeds of the loans may be used to pay certain enumerated business expenses, including payroll, employee benefits, rent, utilities, and interest on mortgage and debt obligations.

Can you use PPP to pay yourself?

Under the PPP, your payroll expense can include your salary expenses and health insurance premiums. … Since you can use the PPP funds to pay yourself through the Owner Compensation Replacement, you’ll be considered to be fully covered during the 8-week covered period if you use that timeframe.

Do PPP loans have to be repaid?

A key component of PPP loans is government forgiveness—if businesses use these loans to cover payroll and other crucial costs over an eight-week period, the loans can be forgiven, effectively turning them into grants.

How are PPP loans calculated?

PPP loans are calculated using the average monthly cost of the salaries of you and your employees. But if you’re a sole proprietor, your PPP loan will be calculated based on your business’ net profit. Your salary as an owner will be defined through the way your business is taxed.

What expenses can PPP loans pay?

You can use the loan to fund payroll costs, employee salaries, costs related to the continuation of group healthcare benefits during paid leave (sick, family or medical), insurance premiums, mortgage interest payments, rent, utilities and interest on any other debt obligation incurred before February 15, 2020.

What documents do I need for PPP forgiveness?

Documentation Needed for PPP Loan ForgivenessDocumentation verifying the number of employees on payroll and pay rates—including IRS payroll tax filings and state income, payroll, and unemployment insurance filings.Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.More items…•

What are the rules for PPP forgiveness?

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll). PPP loans have an interest rate of 1%. Loans issued prior to June 5 have a maturity of 2 years.

When should I apply for PPP forgiveness?

Similar to the point about FTE count above, you want to apply for forgiveness when your employees’ salaries or hourly wages are at a high point compared to pre-COVID levels in order to minimize the potential reduction in forgiveness to meet Safe Harbor.

When can I apply for PPP forgiveness?

Expanding to 24 weeks, from eight weeks, the covered period during which PPP loan recipients can spend the funds and still qualify for loan forgiveness. The 24-week period applies to all loans made on or after June 5. Borrowers that received loans before June 5 can choose to elect an eight-week period.

Can I apply for both PPP and Eidl?

Yes, you can apply for both. But you can’t use the funds from both loan programs for the same purpose. For the most updated and complete information, read the FAQs on the EIDL and FAQs on the PPP. For more information, visit The SBA has a hotline to help answer questions 1-800-659-2955, 7 days a week from 7:00a.

How do I apply for PPP loans?

Use your regular bank account to pay for expenses. Then, transfer the appropriate PPP loan funds from your PPP account to your regular bank account to cover them. Your first journal entry will debit the appropriate expense account (e.g., Payroll, Mortgage Interest, Rent, or Utility).

Are PPP loans forgivable?

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 60% of the forgiven amount must have been used for payroll). PPP loans have an interest rate of 1%. Loans issued prior to June 5 have a maturity of 2 years.