You’ve applied for the Paycheck Protection Program (PPP,) and you’ve been told that you are getting the money. Awesome! But now you need to use those funds wisely in order to have your loan forgiven, and the information can feel very confusing. Don’t panic! We’ve got your back covered with some great videos and worksheets to help you navigate this program.
Remember, to be sure you’ve covered everything for your specific situation, consult directly with a trusted financial professional. All information in these resources is intended for educational purposes.
Now, let’s get started!
The Basics of PPP Loan Forgiveness
Of course we have to start with the basics of getting your PPP Loan Forgiven. This overview talks about how to budget the PPP funds well, and I’m walking you through an Excel worksheet that can help you keep track of your PPP money in order to ensure maximum forgiveness. This will help you plan, prepare and be ready to apply for forgiveness of your PPP loan.
Make sure you check with your bank on any forgiveness requirements! This tool is meant to help you PLAN for forgiveness, but it does not guarantee forgiveness.
You can find the worksheet from that video here. https://clara-cfo-group-llc.ck.page/d5ef5d9b84
The PPP Loan Forgiveness Application can be found HERE.
Corporation Specific Help
Of course, the basics of getting your PPP loan covered does leave A LOT of questions. Most of those boil down to 9 types of common FAQs that are addressed in PPP Loan Forgiveness FAQs Answered. Some of these will change or be clarified further as we keep getting guidance.
One of the reassuring clarifications we’ve already received was FAQ 46. Some of those early rules meant to target large business owners were pretty scary before this clarification! FAQ 46 Safe Harbor Explained will help calm some of the fears of audit and additional scrutiny if your loan is under $2M.
FAQ 46 can be found here (Page 16): https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
Some additional common questions have been about Employees on 1099? and Scorp Owners Pay. This comes down to 2 things addressed in that video:
- Employees should not be getting a 1099. Contractors get 1099s. Contractor expenses are not allowable under the PPP forgiveness rules!
- Scorp owners – you need to be paying yourself a reasonable compensation in payroll.
Things We ALL Need to Know.
Documentation will be key in your preparation, use of and forgiveness application for PPP funds. In How to Document Your PPP Expenses for Forgiveness, we’re going through 3 things you need for each expense in order to ensure the bank and/or SBA can see your expenses as legitimate. This information comes from an auditing background, and helps explain what and why the bank will care about these details.
If you’re wondering what is the “right” way to account for your PPP loan, it’s the classic “it depends” answer, depending on your situation. However, How to Account for Your PPP Loan to Maximize Forgiveness provides some basic guidelines to help you figure out a direction for YOUR situation. This is the video to send to your bookkeeper!
Taxability of expenses is something to consider in your accounting as well. Are PPP Expenses Tax Deductible? looks at the implications for your 2020 tax return. Forgiven amounts of allowable expenses may not be eligible to include as deductible items later. Be sure you consider this now!
IRS notice discussing taxability can be found HERE.
There is a lot of confusion about the EIDL Loan and the PPP Loan! What are they used for? Can they be forgiven? What are the spending restrictions? How can I use them once I have them? How to Use EIDL vs PPP Loans looks at HOW to use the money once you’ve gotten them. Using these funds properly can help ensure your current financial stability and future financial success. Knowing about cash flow forecasting can help you decide how best to use these funds for your business.
As more information becomes available…
Over the last several weeks, additional guidance continues to roll out for PPP loans. Be sure to watch these video updates as you use, document and account for your PPP funds.
Unforgivable PPP Payroll Costs
This short update clarifies items such as worker’s compensation, health savings accounts (HSAs), fringe benefits (i.e. accident or disability insurance) and payroll processing fees.
Some costs are unforgivable, but you may incur them anyway. Until we receive a final list of all the payroll costs that are considered forgivable under the CARES Act and the PPP loan, we need to assume that these costs are unforgivable!
Update to PPP Forgiveness Rules from 5/22
The interim rule is HERE for your reference:
The video looks specifically at:
- Can I give my employees Hazard Pay, bonuses or myself more as the owner?
- How many hours is an FTE?
- Who can elect an alternative payroll covered period?
- Can I get more than 2 months of utlilities covered or prepay my mortgage interest/
- And more!
If you would like to discuss your specific situation with us, you can book a 30 minute Quick Fire Clarity session. This is perfect for answering your PPP questions.
Find our company at https://claracfo.com/
Disclaimer: This blog and the linked videos are intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.