What Can You Spend Your PPP Loan On?

If you’re a small business owner who has been affected by the coronavirus pandemic, you may be wondering what you can spend your PPP loan on. Read on to learn more about what expenses are eligible for reimbursement.

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Payroll Costs


The cost of wages includes all forms of employee compensation, such as salary, hourly pay, commissions, tips, and bonuses. The PPP specifically allows for the forgiveness of payroll costs that were incurred during the covered period or the alternative covered period.

Health insurance

Some of the most common payroll costs that are covered by the PPP loan are salaries, wages, vacation pay, parental leave, Severance pay, and health insurance. As long as these costs make up at least 60% of your total loan amount, you can use the loan for them.

Retirement benefits

One of the most common payroll costs is retirement benefits. The PPP allows you to spend up to 3.5 times your monthly average on these costs, which can include 401(k) contributions, pensions, and health insurance premiums for early retirees.

Mortgage Interest

You can use your PPP loan for mortgage interest payments on any business property that you own. This includes your primary residence, a second home, or an investment property. You can also use the loan to pay for interest on a business auto loan, as well as any other type of business debt.

Home equity loans

Home equity loans are popular because they offer a fixed rate for a set period of time, usually between five and 30 years. That means you’ll know exactly how much your monthly payments will be and can plan accordingly.

Another advantage is that home equity loans give you the flexibility to use the loan for anything you want, including home improvements, debt consolidation or even college tuition.

There are, however, a few drawbacks to home equity loans. One is that they often require collateral — that is, you need to have equity in your home in order to qualify for the loan. Additionally, home equity loans typically have higher interest rates than first mortgages.

Mortgage insurance

You can use your PPP loan to cover mortgage insurance, but only if your mortgage was issued before February 15, 2020.


The answer is simple: you can use your PPP loan for just about anything that keeps your business operational.

Office space

The PPP loan can be used for office space rent, as long as the lease was in effect before February 15, 2020.

Warehouse space

The PPP loan can be used for rent, and this includes warehouse space. If your business needs more room to store inventory or products, you can use the loan to cover the cost of renting a larger space. This can help you keep your business running smoothly and efficiently, and it can also free up some much-needed space in your home or office.



You can use your PPP loan for any business purpose, including electricity. This can include costs such as:
-Your electric bill
-The cost of wiring and rewiring your office or workspace
-The purchase and installation of new electrical equipment
-The cost of repairs to existing electrical equipment


One common utility that businesses may spend their PPP loan on is water. This can include water bills, sewer bills, and other associated costs. Water is an essential utility for many businesses, so spending part of the PPP loan on this expense can help ensure that the business can continue to operate.

Natural gas

-You can spend your Paycheck Protection Program (PPP) loan on natural gas as long as it is used for a business purpose.
-Examples of business purposes include: space heating, water heating, cooking, and dry cleaning.
-You cannot use PPP loan funds for residential purposes.

Interest on other debts

Auto loans

You can use your PPP loan to make payments on any outstanding auto loans you have. This can include both loans for cars and loans for other types of vehicles, such as motorcycles, RVs, or boats.

Business loans

PPP loan funds can also be used to refinance an existing Small Business Administration (SBA) 7(a) loan or other eligible non-federal debt obligations incurred before the covered period. This can free up cash for other uses, like covering payroll or other operating expenses.

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