Updated: Mar 31
Congratulations you’ve been funded! Now what?
You want to get most if not all of your loan forgiven so what do you do now?
First and foremost have a plan to track the funds in your accounting to PPP. This may sound
confusing but it’s actually fairly simple and the purpose is to make sure that if you receive
multiple forms of funding that it does not cover the same expenses. In QuickBooks you can use
class codes, in other software there may be a similar equivalent but in either case you can just
add payroll journal, checks or receipts to a separate folder deemed “PPP Expenses”
2. One thing you will also want to do is pay attention to your FTE (Full time employee) number.
The maximum amount of forgiveness will be based off of this number. What does that mean? Well,
say you had 70 employees during either “test” period (Feb 15, 2019 to June 30, 2019 or Jan 1,
2020 to Feb 29, 2020) and then during the 8 weeks after funding you had 65 average employees.
That means that your maximum forgivable amount is 92.86% of the loan. Plus remember 75%
of the funds need to be used for payroll and 25% can be used for rent, utilities or interest.
3. You will also want to make sure that you have not decreased wages for the position by more
than 75%. You have to pay people at least 75% of what they were getting paid prior to COVID-19
4.Talk to your bank, just like each lender had their own application process… each bank will have
their own forgiveness process as well. You will want to make sure you are communicating with
your banker throughout the 8 weeks to make sure you have the right documentation to go back
to them after 6/30/2020 with the right documents.
This time has definitely brought many things to light and some of it has completely knocked us over.
Securing funding via the PPP is great but as always, you want to make sure you are utilizing those funds
appropriately and make wise decisions. You do not need to stress or panic in regards to spending funds,
it does not need to be a stressful process. Just be sure your funds/loans, etc. are not overlapping
expenses. There has been a special committee appointed to monitoring the use and disbursement of
these funds (Special Inspector General for Pandemic Recovery). Which may mean that you could
undergo an audit, however, if you keep good accounting records and pay your employees about the
same as before, you shouldn’t have any issues.
Remember that even if you don’t exhaust the funds during the period any repayable amount is incurring
a 1% interest rate with a maturity date of 24 months from loan origination.
Hopefully things return to some type of sustainable “normal” where we can at least not worry so much
about cash flow, but in the meantime it’s good to know there are resources out there. Long story short,
keep your books in order and you shouldn’t have any issues!
Contact us for clean up, bookkeeping, payroll or tax help. We are here to partner with you and help you
conquer your books!