April 4, 2020 en_US The Paycheck Protection Program offers up to $10 million to cover payroll, employee benefits and other operating expenses. https://quickbooks.intuit.com/cas/dam/IMAGE/A3x2n4cio/using-paycheck-protection-program-loan.jpg https://quickbooks.intuit.com/r/payroll/payroll-protection-expenses/ How can I spend a Paycheck Protection Program loan?

How can I spend a Paycheck Protection Program loan?

By Myranda Mondry April 4, 2020

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Eligible payroll costs | Excluded payroll costs

Editor’s note: Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the latest guidance from SBA and Treasury to confirm current program rules and how they apply to your particular situation. The information contained in this article only applies to certain small businesses and other eligible organizations. For example, effective April 20, 2020, if you filed or will file a 2019 IRS form 1040 Schedule C, other rules apply.

The Paycheck Protection Program (PPP) is intended to provide a way for small business owners to keep their workers on the payroll and maintain wages. The Small Business Administration (SBA) classifies PPP loans as 7(a) small business loans. Borrowers can apply for up to $10 million, with a maturity of 5 years and an interest rate of 1%.

Loans issued under the Paycheck Protection Program can be used for eligible payroll costs, mortgage interest, rent, utilities, interest on certain other debt obligations, and refinancing an Economic Industry Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 (though at least 60% of the loan proceeds must be used for negligible payroll costs). PPP loans may be forgivable, in whole or in part, if certain requirements are met.

Eligible payroll costs may include:

  • Individual employee compensation in excess of annual compensation of $100,000 per year
  • Compensation for employees who live outside the U.S.
  • The employer’s share of certain payroll taxes
  • Qualified sick and family leave wages under the Families First Coronavirus Response Act

Excluded payroll costs may include

  • Individual employee compensation in excess of annual compensation of $100,000 per year
  • Compensation for employees who live outside the U.S.
  • The employer’s share of certain payroll taxes
  • Qualified sick and family leave wages under the Families First Coronavirus Response Act

For a comprehensive list of included and excluded costs, please refer to the latest guidance from SBA and Treasury.

Excluded payroll costs may not count towards the 60% of funds that must be used for payroll costs. While SBA 7(a) small business loans may generally be used for a variety of business purposes, such as purchasing land or buildings, machinery or supplies, working capital, or refinancing current business debt, using a PPP loan for expenses unrelated to payroll, rent, utilities, interest on mortgage and certain other debt obligations and EIDL refinancing is not permitted under the PPP loan program.

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The resources described above are made available to businesses within the United States of America.

Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly, and the information contained herein may be outdated.  Please refer to the latest guidance from the SBA and Treasury to confirm current program rules.

Given the large demand for additional authorized Paycheck Protection Program funds, not every qualified Paycheck Protection Program applicant will receive a loan.

This content is for information purposes only and information provided should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does it have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.

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Myranda Mondry

senior content creator

Myranda Mondry is a senior content creator for the QuickBooks Resource Center. She graduated with a degree in English and Journalism from Boise State University. Her work has been published in Forbes, The Huffington Post, and other top-tier publications. Myranda currently resides in Boise, Idaho, where she runs an Etsy shop selling handmade heirloom quilts. She’s passionate about her dogs, '80s rock music, and helping small businesses succeed. Read more