Business Loans

Yes, You Can Use a PPP Loan for Expenses Other Than Payroll

Feb 22, 2021 • 4 min read
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      UPDATE: The PPP loan application period ended May 31, 2021. Apply for the Employee Retention Credit today through Lendio.


      Paycheck Protection Program (PPP) loans are designed to help small businesses—and nonprofits—keep employees on the payroll, but what exactly does that mean? While the loans are intended largely for payroll-related costs like salaries and health insurance premiums, you can actually use a PPP loan to cover a wide range of pandemic-related operating costs.

      Allowed Uses for a PPP Loan

      While you will need to spend 60% of the loan funds on payroll costs, you can spend the other 40% of your loan on a variety of other pandemic-related costs, all of which are considered “allowed uses” for the loan.

      Costs Other Than Payroll Included in Allowed Uses

      • Healthcare costs related to the continuation of group healthcare benefits, including insurance premiums
      • Rent
      • Utilities
      • Mortgage interest payments (payments toward a mortgage principal are not eligible for forgiveness)
      • Interest on any debt obligations incurred prior to February 15, 2020
      • Refinancing for an EIDL received from January 3, 2020, to April 3, 2020
      • Covered expenses like business software or cloud computing services that assist you in:
        • Business operations
        • Product or service delivery
        • The processing, payment, or tracking of payroll expended, 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

      Payroll Costs Included in Allowed Uses

      • Compensation: salaries, wages, commissions, tips, etc., up to $100,000/employee annually ($8,333/month). 
      • Paid time off: vacation, parental, family, medical, or sick leave
      • Separation or dismissal allowances
      • Payments towards retirement benefits
      • Group vision, dental, disability, or life insurance
      • Taxes: payment of state or local taxes assessed on the compensation of employees

      Loan Forgiveness

      Loans funds used on eligible uses during the covered period may qualify for loan forgiveness. Due to the demand for PPP loans and loan forgiveness, you may need to spend at least 60% of loan funds on payroll-related expenses to qualify for forgiveness. 

      What’s the covered period? It’s the 24-weeks directly following the disbursement of your PPP loan. To learn more about loan forgiveness, visit the PPP Loan Forgiveness page. 

      Ready to take the first step toward your potentially-forgivable loan? Apply now.

      Quickly compare loan offers from multiple lenders.

      Applying is free and won’t impact your credit.

      Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.
      Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.
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