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Paycheck Protection Program (PPP) Loan Recommendations

April 30, 2020 
binders labeled with salaries and payroll

If you've recently been approved for PPP funding, here are a few recommendations to make the tracing of funds as clear as possible:

            1. Create a budget for the next 8 weeks.

This will give you a plan on how to spend the money while staying in compliance.

            2. If possible, place the money in a separate bank account.

Having a designated bank account for PPP funds keeps all funding separated, and shows exactly what has left the account and where the PPP funds have went. This makes tracking the PPP funds so much easier.

            3. Non-Payroll Covered Expenses:

Pay all interest on mortgage obligations incurred in the ordinary course of business, rents on leasing agreements, and payments for utilities out of the newly established PPP checking account. Utilities include electricity, gas, water, phone, and internet. Keep invoices, statements, and canceled check to prove allowable expenses.

            4. Payroll:

Transfer the gross wages amount out of the PPP checking account and into your payroll checking account. Then pay your payroll just like you have done in the past. This includes all employer paid group health insurance and employer paid retirement benefits.

Remember that 75% of the loan must be used for payroll.

There are two safe harbors to remember for the full-time equivalent employee test and the wage reduction test.
  • Full Time Reduction Elimination Test: Make sure the number of FTEs on 06/30/20 is the same as it was on 02/15/20.
  • Salary and Wage Reduction Elimination Test: On 06/30/20, make certain all individuals who fall below $100,000 annually have the same pay as compared to 02/15/20.
*The info above is guidance given to us by the Small Business Administration, and does not ensure loan forgiveness. SBA will be providing more detailed forgiveness actions and requirements in the near future. For more guidance, visit