The Payroll Protection Program (PPP) of the Small Business Administration’s debt relief program for forgiveness are due, so it’s important to begin determining what expenses will be covered and will you have enough expenses to substantiate the loan document requirements.  Below are key points as well as a helpful Excel® spreadsheet to utilize.  Coverage starts from the date of receipt of the actual loan into your bank account.

  • Eligible payroll costs paid on the day that paychecks are distributed through electronic transfer or paper check distribution during the Covered Period or Alternative Payroll Covered Period
  • Each individual employee may not exceed an annual salary of $100,000, as prorated for the Covered Period. Count payroll costs that were both paid and incurred only once
  • Include only payroll costs for employees whose principal place of residence is in the United States
  • Employer taxes and unemployment are NOT to be included
  • Benefits including: 401(k) employer contributions such as match and profit sharing , health, vision, and dental insurance can be included
  • Employee headcount and compensation levels must be maintained
  • Not more than 25% of the forgiven amount can be allocated to non-payroll costs, but at least 60% of payroll costs must be allocated for forgiveness
  • Non-payroll costs include: business mortgage interest payments, business rent or lease payments, business utility payments
  • All non-payroll costs should have documentation verifying obligations/services prior to February 15, 2020

Again documentation is key for audit purposes.  As the rules have been in constant change since it was introduced earlier this year, there could be additional tweaks by the SBA which could affect your final submission.  However it’s important that you confirm that you have confirmed that your payroll obligations have been met within the 24 weeks from the date of your PPP loan deposit.

Dwayne J. Briscoe