Any interest paid on mortgage on property used for business purposes is an eligible expense that the PPP can be used for, and qualifies for forgiveness. Acceptable examples include: Mortgage interest on a warehouse you own to store business equipment. Auto loan interest on a car you own to make business deliveries.
If you obtain a PPP loan and use your PPP loan proceeds for any purpose other than those specifically approved and not exempted under the CARES Act, you will have to repay those amounts to the SBA.
Wire Fraud: If you used a device, like telephone, internet, etc, to defraud an institution in order to gain funds from a PPP loan – you can be convicted of wire fraud. Penalties for wire fraud can include a prison sentence up to 20 years, and in addition – restitution to anyone impacted.
No, the PPP cannot be used to pay outstanding business, corporate, or property taxes. However, PPP funds can be used to cover state and local payroll taxes that you (the employer) have to pay over the loan period. Federal employment taxes are not a forgivable expense.
UTILITIES. Utilities are the last qualified expense under the PPP program. These are described by the SBA as phone, internet, gas, water, electricity, etc. Similar to previous qualified expenses, it is important that these service contract agreements predate February 15, 2020.
Costs Other Than Payroll Included in Allowed Uses
Covered expenses like business software or cloud computing services that assist you in: Business operations. Product or service delivery. The processing, payment, or tracking of payroll expended, human resources, sales, and billing functions.
First Draw PPP loans can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for ...
If you use PPP loan proceeds for any purpose other than those listed immediately above, the SBA will direct you to repay those misused amounts. If you knowingly use the PPP loan proceeds for an unauthorized purpose, you may be subject to additional criminal liability, such as charges for fraud.
You can use the PPP funds to pay yourself through what's called owner compensation share or proprietor costs. This is to compensate you for a loss of business income. To take the full amount of owner compensation share, you will have to use a covered period of at least 11 weeks weeks.
You can use your loan proceeds to pay your expenses—payroll, rent, utilities, and mortgage interest. These are the expenses that, according to the CARES Act, will be forgiven by the SBA. In addition, there are other “eligible” uses of your PPP loan which, while allowed, will not be forgiven.
Utilities include electricity, gas, water, telephone, internet access, and transportation. Collectively, these are referred to as non-payroll costs, and the forgiven amount cannot exceed 40% of the total PPP forgiveness. Eligible for forgiveness if: Paid during the covered period, or.
In addition to payroll, rent, mortgage interest, and utility expenses, borrowers may now use PPP funds for certain other expenses, provided that the borrower uses at least 60% of the loan funds for payroll expenses.
“Transportation Costs” means transportation utility fees, not employee transportation costs like fuel. Under the CARES Act, forgivable uses of PPP funds include payroll costs, interest on any covered mortgage obligation, covered rent obligations and covered utility payments.
Can I deposit my PPP/SBA loan into my individual or joint Checking account? We currently only offer personal and joint checking accounts. As such, we are not able to accept PPP loans for your business into your personal or joint checking accounts.
It is illegal to make false statements to a financial institution, so if you were to lie on a PPP loan, you could be charged with this federal crime. This act is criminalized under section 1014 and if convicted, you can face quite a hefty fine along with imprisonment for up to 30 years.
The Paycheck Protection Program Flexibility Act made some significant changes to PPP loans. One of the most significant changes was the eight-week forgiveness period. You now have a choice: If your loan was issued on or before June 5, 2020, you can opt to take advantage of a 24- week period to spend the funds.
The SBA and the US Treasury have released a new forgiveness application for borrowers with Paycheck Protection Program (PPP) loans less than $50,000. In addition to simplifying the application, a borrower can receive forgiveness for their loan even if they have laid off employees since receiving their PPP loan.
60/40 Rule
However, as a self-employed worker, you can claim all 100% of your PPP loan as payroll under compensation replacement. Forgivable cash compensation is limited to $100,000 per employee on an annualized basis, which means you can use all $20,833 on your personal salary.
Yes, essentially! You can treat the Owner Compensation Replacement as personal income and use it however you want. With guidance allowing for 2.5 months' worth of net or gross profit as OCR, that means your entire PPP loan could be used for personal purposes.
Self-employed individuals can take the entire PPP loan amount as owner compensation replacement so long as you use a covered period of 11 weeks or longer. As a self employed individual, your owner compensation replacement will count as payroll for the PPP.
A: As set forth in our previous alert, borrowers may use PPP loan proceeds for salaries, wages, and commissions; group health-care benefits and insurance premiums; mortgage interest payments (though prepayment fees or payment of principal is not allowed); rent; utilities; and certain interest on other debt obligations.