Business Loans

How to Track PPP Loan Expenses for Forgiveness

Feb 28, 2021 • 5 min read
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      Paycheck Protection Program (PPP) loans may potentially be the most attractive government loans in history. Want a 1% fixed APR? Check. High approval rate? Check. On their own, those 2 features would be enough to win the hearts of small business owners who desperately need a financial lifeline in the face of the coronavirus pandemic.

      But we know that’s not the primary draw for most people because PPP loans come with an even more appealing feature: potential loan forgiveness. That’s right—Congress allocated about $284 billion from the $900 billion coronavirus relief package to support our nation’s small businesses. So if you follow the guidelines and track your finances, you can potentially have as much as 100% of the loan’s principal forgiven.

      What Expenditures Do You Have to Track for Forgiveness?

      Allowed uses for potential loan forgiveness fall into 2 primary categories: payroll costs and other business expenses. The full list of what falls into those categories includes:

      Your Business’s Payroll Costs

      This category is the most important part of this program dedicated to protecting paychecks. A minimum of 60% of your loan funds must be spent on payroll if you want to have a chance of full forgiveness. Approved expenses within the payroll category include:

      • Compensation in the form of salaries, wages, commissions, or similar compensation up to $100,000
      • Payment of cash tips or equivalent
      • Payment for vacation, parental, family, medical, or sick leave
      • Allowance for dismissal or separation
      • Payment of retirement benefits
      • Group vision, dental, disability, or life insurance
      • Payment of state or local taxes assessed on the compensation of employees

      Your Business’s Other Business Expenses

      This category is surprisingly broad, allowing you to use 40% or less of your funds on many crucial expenses. Approved expenses include:

      • Healthcare costs related to the continuation of group healthcare benefits during periods of sick, medical, or family leave, as well as insurance premiums.
      • Mortgage interest payments (but not prepayment or payment of the mortgage principal)
      • Rent
      • Utilities
      • Interest on any other debt obligations incurred before February 15, 2020
      • Refinancing an SBA EIDL received between January 31, 2020, and April 3, 2020
      • Covered expenditures such as business software or cloud computing services that facilitate:
        • business operations
        • product or service delivery
        • the processing, payment, or tracking of payroll expenses, human resources, sales, and billing functions
        • accounting or tracking of supplies, inventory, records, or expenses
      • Covered property damage costs
      • Covered supplier costs
      • Covered worker protection expenditures

      Track ‘Em As You Spend ‘Em

      Inputting all your PPP expenditures at the end of your eligible loan forgiveness period is the bookkeeping equivalent of cramming for a big test the night before. Sure, you may still pass, but it’s going to cause more drama and at least 1 sleepless night.

      Set yourself up for success by tracking your expenses as you incur them. It’ll reduce stress and leave you better prepared. Plus, if any issues arise, you’ll have more time to deal with them.

      Categorize Correctly

      To increase your likelihood of a smooth and successful loan forgiveness application, you need to correctly categorize each of your expenses. This activity can be done manually, or your accounting software may be able to automatically categorize each expense, reducing some of the guesswork and manual labor. The last thing you need is another tedious task preventing you from getting back to running your business.

      Provide Necessary Documentation

      Like a Real Housewife at a reunion special, the SBA will say, “Show us the receipts.” You’ll need to provide payroll documents and proof of things like utility bills and rent or mortgage interest payments. Bookkeeping software can seamlessly add these details to each expenditure type so that it’s well-organized and ready for when the SBA wants to check your work.

      Use Bookkeeping Software to Reduce the Chance of Errors

      Tracking your expenses through software actually helps you in myriad ways. As mentioned earlier, it makes categorization a breeze. You can easily attach receipts and provide necessary documents. Plus, the software will ask you for the required information for effective tracking, reducing the risk of mistakes. When it comes to loan forgiveness, you don’t want to take chances that might forfeit your chances.

      Outsource Your Loan Forgiveness Preparation

      You can take the unease and effort out of the loan forgiveness preparation process by working with Lendio’s software to prepare your loan forgiveness application. Here’s how we’re helping small business owners:

      • Easier expense tracking
      • Automatically categorize expenses in approved categories
      • Provide a complete packet to submit to your lender
      • Suite of resources, including a helpful checklist
      • Provide support if you have any issues after submitting the application

      Our interface and resources are all engineered to make bookkeeping feel like less of a drag. With our help, you can streamline the PPP loan experience and potentially give yourself a better chance for a substantial portion of the loan being forgiven.


      Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice. All information, content, and materials available in this post are for general informational purposes only. Readers of this post should contact their attorney, business advisor, or tax advisor to obtain advice with respect to any particular matter.
      About the author
      Grant Olsen

      Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on and Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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