Generally, PPP funds can be used for four purposes: payroll, mortgage interest, rent/lease, and utilities. Payroll should be the major use of the loan. The second stimulus bill also introduced four new categories of expenses that are allowed.
Are PPP funds forgivable?
The best part about PPP loans is that up to 100% of the funds can be forgiven. However, you’re going to have to play by the SBA’s rules: Forgivable expenses must be spent on eligible categories and adhere to the 60/40 rule.
What expenses are forgivable under PPP?
Approved payroll expenses accepted for PPP loan forgiveness include:
- Wages, including tips and commissions.
- Paid time off for vacation or sick leave.
- FMLA.
- Severance payments.
- Group healthcare benefits.
- Retirement benefits.
- State or local tax.
- Certain sole proprietor and independent contractor compensation.
Is PPP loan interest forgivable?
o Expenses eligible for forgiveness. The amount of loan forgiveness can be up to the full principal amount of the loan plus accrued interest. But PPP loan proceeds may be Page 4 – 4 – forgivable only to the extent they are used to pay for the following expenses within the relevant time-period of use.
When does a PPP loan qualify for loan forgiveness?
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement: Employee and compensation levels are maintained; The loan proceeds are spent on payroll costs and other eligible expenses; and; At least 60% of the proceeds are spent on payroll costs
What can the PPP money be used on?
This limitation on use of the loan funds will help to ensure that the finite appropriations available for these loans are directed toward payroll protection, as each loan that is issued depletes the appropriation, regardless of whether portions of the loan are later forgiven.
Why are nonprofits not eligible for PPP forgiveness?
This, in essence, allows the states to be the pass-through beneficiaries of the PPP funds, which they were not eligible for directly. Nonprofits will be allowed to keep all their PPP funds, but a portion of those funds will not qualify for forgiveness because the costs were not really borne by the nonprofit agency.
Can a self employed person use their PPP funds?
Taking out funds as owners draws are not eligible PPP expenses at all, and would also not qualify for forgiveness. Self-employed individuals can pay themselves with PPP funds, by claiming their owner compensation replacement. Their entire PPP loan is potentially forgivable.
