Right now, we are in all in a strange place as far as what life looks like.
Routines are all over the place, nothing looks as it did a few weeks ago, and businesses and personal finances are nothing short of difficult or stressful. Overall, everyone is still adjusting to what seems to be a new normal. With these circumstances at hand, the government issued the Paycheck Protection Program (PPP). If you received a PPP loan, there are specific steps to take to ensure that you are following all of the guidelines laid out by the Small Business Association (SBA).
If you have received a PPP loan, it is important to remember that there are only certain items that can be purchased with this loan. With these guidelines on the loan, the guide states upon receiving, you should deposit the funds into a separate bank account from your usual one. By separating your funds, you are able to avoid spending money on non-qualified items, such as office supplies or workers compensation, which will be monitored closely.
If you are wondering what those guidelines are, we have them here for you.
The use of the PPP loan funds is limited to the following guidelines:
● Payroll (including employer paid health insurance and retirement, but not match on payroll taxes)
● Rent (it is not clear if anything other than a written agreement in place prior to February 15th will be accepted for purposes of having the loan forgiven)
● Mortgage Interest (on loans for real property and equipment that were in place on February 15th)
● Utility Payments (that you were paying by February 15th)
If you fail to adhere to the loan requirements, this can result in:
● Not all of the loan being eligible for forgiveness
● The bank may try to get you to reimburse them for their 5% origination fee
● The loan may become recourse
● There could be an assertion of fraud
Once the funds are in a separate account, it is important to remember to record any payments made to keep yourself and all accounting efforts in one place for accountability and any follow ups that may occur.
If you have any questions regarding any loans given out during this time, please do not hesitate to reach out to us here at Broussard Poché, LLP.