If your payroll costs are equal to or greater than your PPP loan amount, you do not need to document non-payroll costs. Q11: Why are the payroll costs in the report different from my normal payroll information? • If you spend less than 75% of your PPP loan on payroll costs, the maximum amount that can be forgiven is decreased • The maximum forgiveness is decreased pro-rata based on the PPP borrowers can have their first- and second-draw loans forgiven if the funds are used on eligible costs. If there’s an opportunity where you can use some PPP proceeds to potentially get forgiveness, and then for the non-payroll costs, you would want to maximize the non-payroll costs up to that 60/40 ratio that exists in the program. Payroll costs include: Salary, wages, commissions and tips—up to $100,000 annualized for each employee. In addition, the following costs … A: While the amount of a loan under the PPP is based on payroll costs, the CARES Act has very specific requirements about what payroll costs are included and excluded for … And at least 60% of your loan must be spent on payroll costs to qualify for full forgiveness. Once you have either a PPP1 or PPP2 loan, it’s important to understand what costs are covered so you can maximize forgiveness. That essentially would give you the ability to go after the ERC credit. Below is a list of documents to submit with your PPP loan forgiveness application. Also, each category of expenses is considered separately, so you only need to include documentation for the specific category included in your requested forgiveness amount. Eligible costs. We can start projecting that out. Before going into detail on PPP loan forgiveness, I want to provide a quick overview of the PPP loan program.As I said, it was launched in March of 2020 as part of the $2 trillion CARES Act.The program was designed to help businesses get tax breaks, keep employees on the payroll, and cover several other costs to keep their businesses afloat.. By June, the first modification came to the … According to the forgiveness details section of SBA’s Paycheck Protection Program page, you must use no less than 60% of the loan amount to cover the payroll costs listed above. Not only do you have to be judicious about how you use your PPP loan funds, but you also need to take special care of how much you spend between those 2 categories. For example, if a borrower received a PPP loan amount $100,000 and spent $30,000 on payroll costs and the remaining balance on non-payroll costs, then loan forgiveness calculation would only allow $20,000 of non-payroll costs in addition to the $30,000 payroll costs. As with the first round of the PPP, the costs eligible for loan forgiveness in the revised PPP include payroll, rent, covered mortgage interest, and utilities. Loan Forgiveness –75% Payroll Limitation • If you spend at least 75% of your PPP loan on payroll costs, the entirety of the loan is eligible for forgiveness. Borrowers will be asked to certify that the payroll costs claimed for forgiveness in their PPP Loan Forgiveness Application are eligible for forgiveness under the applicable guidance. In addition, please see here for helpful information about PPP loan forgiveness, including a discussion of which payroll costs are eligible for forgiveness. A second round of Paycheck Protection Program (PPP) loans brings many questions around funding eligibility and how the money can be spent to qualify for forgiveness. This includes questions about what costs can be included in allowable payroll costs in order to maximize loan forgiveness.

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