$350 billion may seem like a lot of money, but when it’s divvied up between the desperate small businesses of America (and a few large corporations milking the system for millions), that Paycheck Protection Program (PPP) pool of potentially-forgivable government funds drains in a matter of days. For the countless number of small businesses that missed out on the allotted funds, there may be hope.
Round 2 of Funding
Members of Congress have spent weeks arguing amongst themselves as to how, when, and where additional funding is to be allocated. However, they made a bit of progress, and small businesses may see an addition of roughly $370 billion, with $60 billion allocated to rural and minority-owned businesses and another $60 billion going toward the Economic Injury Disaster Loan (EIDL) from that total. Unfortunately, as nothing is set in stone and details change daily, there’s no way to know the final amount approved until the politicians manage to sign the deal into action.
Uses for Your Funds
In the first round of funding, uses for PPP loans and EIDLs were very specific. We’ll likely either see the same requirements or something very similar. Fortunately, we’ve got an easy-to-follow breakdown for you.
- Salary, wages, commission, or other varieties of compensation
- Paid vacation, parental, family, medical, or sick leave
- Allowance for separation or dismissal
- Healthcare benefits
- Retirement benefits
- State or local taxes assessed on the compensation of employees
Additional Business Expenses
- Interest on any mortgage obligation (this doesn’t include prepayment or payment of principal on a mortgage)
- Interest on other debt obligations incurred before February 15, 2020
Some (But Not All) of the Non-Eligible Expense
- Employee and owner compensation amounts over $100,000
- Compensation for employees whose principal place of residence is outside of the US
- Amounts paid to independent contractors
- Sick and family leave credited under the Families First Coronavirus Response Act
How to Track Your PPP and EIDL Fund Usage
There’s a bit of a bureaucratic quagmire surrounding fund use and tracking when it comes to your PPP loan and EIDL. While there are quite a few ways to spend your government-provided funds, the options are largely the same between the resources. Even though that may seem beneficial, it’s actually a little dangerous because you can’t double up on usage if you want the chance to have some of your loan amount forgiven. To avoid that scenario, you and your business need to track all of your expenses and fund uses.
Sunrise: Your Free Bookkeeping Solution
Sunrise is the free online bookkeeping tool your small business needs to track each one of your daily expenses. This Lendio-powered system can help you stay on top of your loan use. Loaded with special features designed to help you navigate your business finances, this service can set you up for success. All you need to do is link the bank account and credit cards you use, then all of your expenses and income can be automatically categorized.
Once you have your cashflow categorized, you can track where your money comes from and where it goes. With such a useful tool built right into the program, you never need to worry about forgetting and losing track of how you spend your Paycheck Protection Program (PPP) loan or Economic Injury Disaster Loan (EIDL) money. Plus, when it comes time to report on your fund usage to ensure you’ve done everything possible to get loan forgiveness, you’ll be in a much better position.
But Don’t Forget…
As of right now, no official word or details about the second round of funding for the PPP and EIDL are available. We are all holding out hope that the government and certain members of Congress will sort themselves out and get additional funding approved and released to the desperate small business owners across the country.