PPP Funding Q&A: Usage, Tracking, & Forgiveness

With the second wave of the Small Business Association’s Paycheck Protection Program funding now available, many people are seeking information about various aspects of their obligation under the program.

Last week, several members of PBO Advisory Group’s executive management team hosted a webinar on loan proceeds usage, tracking and loan forgiveness.

Below are some of the questions and answers discussed during the webinar.

To view the complete webinar, click here.


The PPP is intended to keep employees on payroll. The current timeframe in which you can use the funds is between February 15 – June 30, 2020. You must carefully track usage of funds within this timeframe.

Seasonal employees are covered under a different time period.

Q: What can PPP funds be used for?

A: Funds can be used for payroll (no more than $100,000 annual salary per employee), employee benefits, rent, utilities and interest on mortgages and other debt obligations. Certain overhead costs (interest, rent and utilities) can be paid with the funds, up to 25% of your total loan. Think of the funds as a restricted budget that must be used during a specific timeframe. If you don’t use it during the eight-week period, you lose it. Funds cannot be used to pre-pay expenses.

Commissions and tips can be factored into wages and are considered a legitimate use of your PPP funds. COBRA fees are also covered, if your company is absorbing the cost. If you want to use your funds for a discretionary 401k distribution, check with your bank first to confirm if this is approved. You can run an extra payroll, if needed, to match the time period under which you must use your PPP funds.

Q: Can funds be used after June 30, 2020?

A: Currently, the act specifies June 30, 2020 is the end date for using PPP funds. If you plan to use funds after that date, we suggest you contact your bank immediately to discuss your specific situation.

Q: How can I ensure that my entire loan is forgiven?

A: Loan forgiveness is based on your FTE ratio and what you use the money for and if you maintain your staff and payroll. Ultimately, it is at the sole discretion of your bank as to what is and is not forgiven. You must carefully track how you use the money, as well as your staff, and payroll during the timeframe so that you can provide them with appropriate documentation.

PBO has posted two articles that can help you determine how much of your loan may be forgiven and how to maximize loan forgiveness:

CARES Act: Know your Denominator

Cares Act: Know Your Numerator and Maximize Your Loan Forgiveness

Q: How do I track expenses and determine my forgiveness?

A: We suggest that you set up a separate bank account in which you deposit the PPP funds and carefully record expenses as you use the funds.

PBO Advisory has posted a forgiveness calculator and video tutorial.

Each bank may have different requirements. Talk to your bank to get any documents that may be required and determine if there are any specific restrictions it may have for using the funds and/or calculating the forgiveness portion of the loan. Your payroll company also can help by providing reports that document how the funds were used.

Q: Can we bring back laid off employees and what if an employee prefers not to return?

A: Yes, you can hire back laid off or furloughed employees. PPP forgiveness doesn’t require that you bring back the same employees so you can hire new workers.  There are many people currently looking for jobs, so you are likely to find multiple candidates.

Also, your employees do not have to be working during the specified time period, they are just required to be on payroll. If they have no work to do, you can still pay them. The purpose of the PPP loan is to keep as many workers as possible receiving paychecks.

Please note that each company’s situation is different. The above information provides a general overview. Please contact any member of the PBO team and we will be glad to help you better understand your specific situation. We’re here to help.