Approved for the PPP Loan? Now what……. This is perhaps more important than having gotten it!

Our office has been receiving many calls from customers, friends, and affiliates about what to do next after being approved for the Payroll Protection Program loan. And what an interesting second installment dilemma for some….

We’ll be going live on 4/23/2020 at 4pm with James Murray, EA to discuss these issues. Click here to register.


What should you do if you’ve been approved and received or are waiting for the receipt of the loan proceeds? Let’s talk about this from a practical standpoint. Consider having the loan proceeds deposited into a separate bank account, likely a new one. Transfer funds from your new PPP Loan proceeds account into your payroll or operating account in the exact amount necessary to cover the cost of payroll, rent/mortgage interest, and utilities. Keep concise and clear documentation to support each transfer (expenditure) of PPP loan monies.

Be specific in the calculation of payroll costs by preparing documentation that clearly reveals the method of determining employee hour wage rates for those employees receiving commission and/or tips. Be careful with self-dealing as the business owner. We are highly confident we’re going to see plenty of audits of PPP loan recipients. Cross your t’s and dot your i’s. This is NOT “free-money”. The business WILL be responsible for paying the employer portion of fica and medicare taxes – these are specifically excluded from the grant/forgiveness relief.

Be very precise to ensure a minimum of 75% of the loan proceeds are used for payroll costs. Otherwise, the loan might remain a loan.

Mark on your calendar the specific date your business receives funding and count out 8 weeks into the future. This is the exact amount of time you have that you MUST spend the loan proceeds.

You MUST maintain your employee headcount and level of gross payroll. If either or both of these criteria decrease, the loan forgiveness amount may be decreased leaving you with an amount you will be required to repay. Additionally, you have until 6/30/2020 to restore both criteria to the levels you maintained prior to making changes during this event, (2/15/2020-4/26/2020).

These requirements are clearly items that may be audited and a finding by whatever agency will perform these audits that you haven’t met the program funding and/or forgiveness guidelines will result in what are likely to be severe repercussions.

Remember – PPP loan money may be forgivable IF the proceeds of the loan are used exclusively for payroll costs*, interest or mortgage^, rent^ and/or utilities^.
* – Payroll costs include salary, wages, commissions, or tips and are capped at 100,000 on an annualized basis for each employee. These costs also include vacation, family, medical and/or sick leave pay; health and retirement benefits; and employer paid state/local taxes assessed on compensation.
^ – service, obligations and agreements in force or began before 02/15/2020

We highly recommend getting in touch with your taxpreparer or attorney to discuss possible ramifications of accepting and utilizing PPP loan proceeds.

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