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Answers to your COVID-19 business questions.

We're committed to helping our business customers navigate COVID-19. If you're a small business owner with questions about PPP loan forgiveness, reopening guidelines, loan repayment and deferrals, or anything else related to the pandemic, ask away! We'll utilize our network of business and legal experts to get you solid, reliable answers, and add them to our compilation of questions and answers below.
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Are utilities a qualifying expense for PPP loans?
  • Yes. At least 60% of the funds must be used to cover payroll costs, but up to 40% of the funds can be allocated to utilities, rent, or mortgage insurance. In order for the utilities to be a qualifying expense however, the service must have been in place prior to 02/15/20. A copy of utility bills and cancelled checks will also need to be provided by the borrower at the time of forgiveness.
Can a business owner pay themselves with PPP funds?
  • It depends. If the business owner is a sole proprietor or salaried, they can use PPP funds toward their own payroll costs, as long as they were listed as an active employee as of 02/15/20. However, if the business owner is paid by owner draws, then the business owner would not be entitled to use PPP funds for their own pay.
Can I buy equipment with proceeds from a PPP loan?
  • At least 60% of the funds from a PPP loan must be used to cover payroll costs, and the remaining 40% can be used to cover mortgage interest, rent, and utilities. According to the CARES Act, only rent under a "covered rent obligation" is eligible for PPP loan forgiveness. The Debt Forgiveness Application does state that "rent" refers to lease expenses on both personal and real property, so if you have an existing equipment lease that was in place prior to 02/15/20, you can use PPP funds to pay that lease. You cannot however make a new equipment purchase after 02/15/20 and use PPP funds to cover the cost of the purchase.
Do I have to spend 40% of my PPP funds on utilities, rent, or mortgage interest?
  • No. 40% is the maximum percentage of PPP funds that can be used for utilities, rent, or mortgage interest, but spending a smaller percentage on these costs is fine. If necessary, the entire loan can be used to pay payroll expenses.
What is considered "payroll costs" under PPP?
  • Salary, wages, commissions, or tips (capped at $100,000 per employee on an annualized basis)
  • Employee benefits (including paid time off, healthcare benefits, and retirement benefits)
  • State and local taxes on employee compensation
Can I pay independent contractors with PPP funds?
  • No. Independent contractors do not count as employees under the Paycheck Protection Program. This is because they are self-employed, and thus could apply for their own PPP loan. If you choose to pay an independent contractor with the funds from your PPP loan, that portion of the funds will not qualify for loan forgiveness.
What could cause my PPP loan to not be forgiven?
  • Any of the following could prevent you from receiving 100% forgiveness on a PPP loan:
    • Using the funds to pay for things other than payroll, rent, utilities, or mortgage interest
    • Using more than 40% of the funds to pay for rent, utilities, or mortgage interest
    • Reducing your employee headcount
    • Reducing employee wages or salaries by more than 25%
    • Not providing necessary documentation with your forgiveness application
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