What Can a PPP Loan Be Used For?

If you’re a small business owner, you may be wondering what a PPP loan can be used for. Here’s a quick rundown of what you can use the funds for.

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General information about PPP Loans

The Paycheck Protection Program (PPP) Loan is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 crisis. The PPP loan will be forgiven if all employees are kept on the payroll for eight weeks and the funds are used for payroll, rent, mortgage interest, or utilities.

What is a PPP Loan?

A PPP loan is a loan designed to provide economic relief to small businesses and nonprofit organizations that are experiencing a temporary loss of revenue due to the COVID-19 pandemic.

PPP loans are provided by participating lenders and are 100% guaranteed by the Small Business Administration (SBA). PPP loans are available through June 30, 2020.

What can a PPP loan be used for?

Funds from a PPP loan can be used for payroll costs, rent, mortgage interest, utility payments, and other eligible expenses. PPP loan funds may also be used to refinance an existing SBA EIDL.

How do PPP Loans work?

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

The loan is 100% federally guaranteed and will be forgiven if the borrower uses it to cover payroll and other eligible expenses.

PPP loans are available through participating lenders, including banks, credit unions, and online lenders.

What Can a PPP Loan Be Used For?

The PPP loan can be used for a wide variety of things that can help your business during this time of need. The PPP loan can be used for payroll, rent, utilities, mortgage interest, or any other debt obligations that you may have. This loan can also be used for working capital, which can help you keep your business afloat during these tough times.

Payroll Costs

One of the key purposes of the PPP loan is to help small businesses keep their workers on the payroll during the COVID-19 pandemic.

Payroll costs are defined as:
-Salaries (including salary, wage, commission, or similar compensation)
-Payments for vacation, parental, family, medical, or sick leave
-Allowance for separation or dismissal
-Payments required for the provision of employee benefits consisting of group health care coverage, including insurance premiums and retirement contributions
-Payment of state and local taxes assessed on compensation

Employee Salaries

PPP loans may be used for payroll and other employee-related expenses, including:

-Salaries (including tips, commissions, and hazard pay)
-Wages
-Sick leave or other paid leave
-Employee benefits (including health insurance and retirement benefits)
-State or local taxes assessed on employee compensation

Rent or Mortgage Interest

Rent or mortgage interest payments are eligible for forgiveness if the property is your primary residence or business. The payments must have been made during the covered period, which begins on the date you received the loan and ends 24 weeks (168 days) later.

Utilities

Utilities are defined as “the operations and maintenance expenses for the normal operation of the business.” This can include items such as rent, mortgage payments, electricity, water and sewer, internet, and phone services.

Other Uses for PPP Loans

Working Capital

One of the most common uses for a PPP loan is to provide working capital for your business. This can include things like:

-Payroll costs
-Rent or mortgage payments
-Utilities
-Insurance premiums
-Interest on debt obligations

Inventory

One of the most common uses for a PPP loan is to purchase inventory. This can include inventory for your online store, retail store, or even inventory for your manufacturing business. If you have existing inventory that you need to restock, a PPP loan can help you cover the cost of purchasing new inventory.

Personal Protective Equipment

PPP loans may be used for personal protective equipment (PPE) that is essential to reopening your business. This includes items such as gloves, masks, face shields, gowns, and other items recommended by the CDC to protect you and your employees from the spread of COVID-19.

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