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Paycheck Protection Program Loan Forgiveness Tracking

Now that many business owners are starting to receive their PPP loans (and EIDL emergency grants), the EDGe team has received many questions about how and what to track to receive maximum forgiveness.

If you received a PPP loan and want to receive loan forgiveness you must track all expenses for the 8 week period beginning from loan origination (the day you receive funds in your bank account.)  75% of the loan must be used for payroll costs.

At the bottom of this post I list the reasons why loan forgiveness may be reduced. Generally, you need to retain the same headcount and payroll expense compared to a previous quarter and you are encouraged to rehire employees that have been laid off. 

As of 4/16, there has not been guidance provided on how to specifically calculate FTE’s during the covered period and how and when rehires occur will impact the forgiveness calculation. Review the detailed EDGe Paycheck Protection Program (PPP) requirements here. 

How to track

You need to track all expenses related to the uses of PPP to receive loan forgiveness from the banks. We are suggesting two options:

1. Set up a separate bank account and pay all PPP expenses through this account

2. Set up a separate class in your accounting software (Quickbooks online or similar accounting software.)

You do not need to set up a separate bank account but for many people this is a much clearer way to track activity. Even if you set up a separate bank account, we also recommend you use a Class field or other identifying field and label any PPP expenses with a ‘PPP’ class.

If you received an EIDL emergency grant you should also track these expenses as well using the same process.

What to track

Payroll records - by employee that shows hours worked, salaries, employer paid benefits.  The employer paid benefits on the payroll report should be supported by paid invoices from the benefit provider. 

NOTE: As of 4/16 guidance has not been provided on what dates count during the covered period.  We are unclear if the 8 week period covers the paid date of the payroll or is it the payroll pay period that is being paid. 

Rent payments – Confirmation of rent paid, a rent/mortgage statement, paid invoice or receipt.

Utilities - Bills paid for electricity, gas, water, telephone, and internet

Transportation – As of 4/16, guidance has not been provided on what is included in this bucket.  Our current recommendation is to track business mileage logs OR actual business vehicle expenses. 

Interest on Mortgage payments – Mortgage statements or paid invoices.  NOTE: Interest on debt obligations incurred before the covered period are NOT eligible for loan forgiveness. 


Deposit of PPP loan - record the loan proceeds as a ‘PPP loan’ current liability on your Balance Sheet. 

Forgiveness of loan – record any loan forgiveness received as a ‘Untaxable PPP income’ on your Profit & Loss statement

NOTE: Any loan forgiveness received is NOT taxed as income.  As of 4/16, No guidance has been provided on whether expenses forgiven for the loan will be deductible expenses. 

Any remaining PPP loan amount after forgiveness will remain on your Balance Sheet as a 1% interest loan amortized over 2 years with a 6 month deferral on the 1st payment (interest still accrues.)  As payments are made you will reduce the PPP loan liability by the principal amount and record interest expense on your Profit & Loss statement. 

NOTE: If you received an EIDL emergency grant and a PPP loan EDGe recommends you record the EIDL emergency grant as a separate current liability on your Balance Sheet as well since this grant will reduce your PPP loan forgiveness. 

Loan forgiveness will be reduced if:

1) The total salary or wages are reduced in excess of 25% compared to the most recent full quarter prior to the loan date.  However, employees paid more than $100,000 in 2019 are not subject to the 25% limitation on salary decreases AND/OR 2) The average # of Full Time equivalents (FTE) per month during the 8 week covered period divided by either at the Borrowers discretion:               a) beginning on February 15, 2019 and ending in June 30, 2019 OR               b) beginning on January 1, 2020 and ending on February 29, 2020

EXCEPTION FOR REHIRES  – If from February 15, 2020 through April 26, 2020 there is a reduction in FTE or salary and by no later than June 30, 2020 the company has eliminated the reduction of staff (ie rehired FTE) then the loan forgiveness will not be reduced. 

3) If a business receives an emergency grant from the SBA EIDL program - the PPP loan forgiveness amount is reduced by this grant. 

If you need to talk through specific options for your business, Molly, Paula, and I are here to help.  Schedule a 30 minute consultation via Zoom where we will discuss your specific business situation for only $49.


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