Updated: Jun 28, 2020
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if certain requirements are met.
What to do once you receive the loan?
For businesses who have now received the Cares Act PPP loans, the question is now - how do I spend the loan so that I qualify for forgiveness? The answer to this question is not easy and is an issue many business owners are facing, having difficulty understanding the terms because the rules and qualifications may seem to be a fluid agreement. We, here at Peridot, are listening to your concerns and hear your questions, therefore, are working diligently to remain on top of this topic for you.
Basically, it boils down to understanding the guidelines for your own company, staying on top of any changes that may occur and staying in close contact with your Peridot consultants. We understand that there is much confusion for making sure the funds are allocated properly, therefore, we’d like to offer some helpful resources with website links to hopefully help assist you in finding the answers to your questions with the click of a button.
FACT SHEET for the Cares Act Law from the US Treasury for Borrowers: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
Basic Spending Guidelines
For loan recipients aiming for forgiveness, here is a basic breakdown for how to spend the loan although it is greatly recommended that for individual businesses to do your research into recommendations: (keeping the same numbers as you had when you applied)
75% of the loan is to be used for payroll
25% of the loan is to be used for interest, rent, utilities
Where can you find answers?
Top resources include government agency websites backed by the US Treasury Department, IRS and the US Chamber of Commerce:
Resource Links at the US Chamber of Commerce for Small Businesses and Nonprofits:
The AICPA.org website is a very useful tool for businesses working alongside a consulting firm in order to find the correct answers:
For any further information on how to receive and allocate the funds from the Paycheck Protection Program for your organization, please contact Barney Holtzmann, CFO at Peridot Consulting.
Barney Holtzmann, CPA, CGMA