COVID-19 Updates: I Received my PPP Loan, Now What?

If you received your PPP loan, what should you do now?

The main purpose of the PPP loan is to keep your employees on payroll and the proceeds should be used for:

  • Payroll costs, including payment of state and local taxes based upon compensation
  • Group healthcare benefits and retirement
  • Interest on mortgage obligations
  • Rent
  • Utilities (electricity, gas, water, telephone, or internet)

How to obtain forgiveness

  • Your loan forgiveness will be reduced if you decrease your full-time employee headcount during the covered loan period.
  • Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
  • 75% of the proceeds must be used towards payroll costs
  • The period to use the proceeds is the eight week period after receiving the loan

The act excludes from payroll costs the compensation of individual employees that make an annual salary of $100,000. Also, the whole point of this loan is to help pay your employees for two months plus other critical expenses during this time period.

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2 Responses to COVID-19 Updates: I Received my PPP Loan, Now What?

  • PG says:

    Nice summary. Reducing pay by more than 25% can reduce loan forgiveness. What about increasing pay? Is there a limit on how much we can increase the pay of our employees? These days, with the expanded unemployment benefits, many can make more money on unemployment than when they were working. This doesn’t seem fair to employees who are working during these difficult times. If I want to increase their pay during these times will I still be eligible for loan forgiveness? Is there a limit on this increase? Thank you