Small loans most likely won’t be targeted for auditing as long as your business has followed all the rules and you document your PPP spending. However, all PPP loans above $2 million will automatically be audited. If you are concerned about this, talk it over with your lender before accepting a PPP loan.
Yes, the law was designed to enable businesses to pay workers, no matter if they are performing different tasks outside of their normal job or not even working at all. The idea is to keep workers connected to their employers so that, ideally, once businesses open back up, employers are able to bring workers back to normal duties.
For independent contractors and sole proprietors, how do you document the cash you draw from the PPP loan to have it forgiven?
You should clearly document all expenses and maintain a separate PPP account that shows how you are using the PPP money. You want to make the process transparent in order to make it easier for the bank to forgive your loan.
If you have a workforce reduction, are you allowed to increase owner or other employee pay to meet the 60% threshold PPP requires?
Yes, you could increase an owner or another employee’s pay slightly. But make sure that you are not going over the $100,000 compensation limit and make sure the pay is well documented.
If I normally pay vacation pay and/or a bonus, can I do it now under the PPP program instead of later in the year like I normally would?
Be careful if you think about doing this. If you were normally accruing vacation pay or issuing bonuses during this same period last year, then you should be fine. But if you are doing things differently in a deliberate manner, this could set off red flags. Operate like you normally do.
Is it necessary to open a separate banking account to utilize PPP funds?
It is strongly encouraged to open a separate account for PPP funds in order to track where the money is going and to maximize forgiveness. However, it’s best to discuss this with your accountant or financial advisor to see what makes the most sense for your operation.
Can I add new employees during the PPP loan forgiveness period, and can their payroll be included for forgiveness?
Yes. The PPP has been designed so you can hire or rehire workers for your operation. You can hire new employees in order to get back to the average headcount and payroll of your business and have your loan forgiven.
What should an employer who has received a PPP loan do about an employee who is receiving unemployment insurance that exceeds their normal wages and they don’t want to come back?
An employee has the right not to Ohio Euclid payday loans come back, but you should remind them they’ve officially been offered the job back in writing. Employees that reject documented offers of re-employment “may forfeit eligibility for continued unemployment compensation,” according to the SBA. If an employee refuses to come back, keep documentation in order to show that when you are trying to maximize loan forgiveness.
As a small business owner, I’m confused about how we pay for rent, utilities, etc., when my PPP loan is 60% for employee payroll. The balance remaining based on the formula will not cover rent. What can I do?
The main purpose of the PPP loan is to maintain or rehire employees, so you must spend at least 60% on payroll. Businesses are encouraged to also look at state and local resources and to talk with local banks about additional short-term loan options. Businesses can also apply for EIDL grants to help cover costs.