What Can I Use My PPP Loan For?

If you’re a small business owner who has recently been approved for a Paycheck Protection Program (PPP) loan, you may be wondering what exactly you can use the loan for. In this blog post, we’ll go over some of the most common uses for PPP loans so that you can make the best decision for your business.

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Introduction

The Paycheck Protection Program (PPP) is a loan designed to help small businesses keep their workers employed during the coronavirus (COVID-19) pandemic.

The PPP is part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was passed by Congress and signed into law by President Trump on March 27, 2020.

The PPP loan can be used for a variety of small business expenses, including payroll costs, rent, mortgage interest, utilities, and worker protection costs.

In order to qualify for a PPP loan, businesses must have fewer than 500 employees. Businesses that are sole proprietorships, independent contractors, or self-employed individuals are also eligible to apply.

PPP loans are available through June 30, 2020.

What Can You Use PPP Loan For?

payroll costs

The PPP loan may be used for payroll costs, including benefits. Payroll costs are defined as:

-Compensation to employees (salary, wage, commission, or similar compensation; vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees);
-Payment of any compensation to a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation; and
-Payment of interest on any mortgage obligation incurred in the ordinary course of business before February 15, 2020;
-Rent under a lease agreement in force before February 15, 2020;
-Utilities for which service began before February 15, 2020.

interest on mortgage obligations

You can use your PPP loan to cover interest on mortgage obligations, rent, utilities, and other debts or obligations incurred before February 15, 2020.

rent

One common question we get is “Can I use my PPP loan for rent?” The answer is Yes! You can use your PPP Loan for any business purpose, including rent.

Here are a few examples of how you could use your PPP Loan for rent:

-If you have a lease agreement, you can use your PPP Loan to cover your monthly rent payments.
-If you own your own commercial space, you can use your PPP Loan to cover your monthly mortgage payments.
-If you have to make any repairs or improvements to your rental space, you can use your PPP Loan to cover the costs.

utility payments

PPP loan proceeds can be used for certain business-related expenses, including utility payments. This can help relieve the financial burden on small businesses that are struggling to keep up with their bills during the COVID-19 pandemic.

Utility payments include costs for electricity, gas, water, sewer, and trash removal. These expenses are necessary to keep your business operational, and the PPP loan can help you cover them.

Other eligible expenses include rent, mortgage interest payments, and certain payroll costs. For more information on what you can use your PPP loan for, check out our guide or contact a SBA-approved lender.

What Can’t You Use PPP Loan For?

lobbying expenses

You cannot use your PPP loan for any lobbying expenses, whether federal, state, or local. This would include any expenditures related to influencing legislation or participating in a political campaign.

political activities

Political activities are not eligible for forgiveness under the PPP loan program. These activities include:

– any activity promoting or opposing a candidate for public office
– voter registration or get-out-the-vote campaigns
– lobbying activities or grants to lobbyists or entities engaged in lobbying activities
– initiatives to influence the outcome of a specific public election

Conclusion

As you can see, there are a wide variety of expenses that are covered by the PPP loan. This loan is designed to help small businesses keep their doors open and maintain their workforce during these difficult times. If you think that you may be eligible for a PPP loan, be sure to speak to your bank or financial institution about applying.