Business Loans

Tracking Expenses for Maximum PPP Loan Forgiveness

Jan 26, 2021 • 7 min read
Woman tracks expenses with calculator
Table of Contents

      UPDATE: The PPP loan application period ended May 31, 2021. Learn about financing options available for small businesses today at

      If you applied for and received a Paycheck Protection Program (PPP) loan, you’re probably already aware of the uses, expectations, and tracking requirements needed to achieve loan forgiveness. After all, it’s never a wise idea to seek financing without understanding all the unique terms you’ll be subject to.

      But this SBA program has lots of unique rules and qualifications, so it is always helpful to get a refresher. We’ve gathered many key definitions and insights for this guide. You might also want to refer to this expense guide to learn how best to track the movement of every single 1 of your PPP dollars.

      Where You Can Spend Your PPP Loan Dollars

      The PPP loan forgiveness specifications are strict when it comes to funds usage. You will need to be aware of 2 core categories: “payroll” and “other business expenses.” To get the forgiveness we all hope you will achieve, it’s vital that you stick to these approved uses and within the amounts stipulated by the SBA (more on that in a bit).


      Contrary to what some people might expect, “payroll” isn’t limited to the paychecks passed out to employees. When it comes to the PPP loan category, quite a few other business costs also fall under the payroll umbrella. In addition to employee compensation, these 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 (but not the employer’s share of state or local taxes)

      Other Business Expenses

      The name of this expense category makes it sound like some sort of catch-all bag, but it’s definitely not. The forgiveness requirements are specific about the qualifications and general parameters surrounding the term “other.” Here’s a detailed breakdown:

      • 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

      Details You Don’t Want to Miss

      Not only do you have to be judicious about how you use your PPP loan funds, but you also need to take special care of how much you spend between those 2 categories. According to the forgiveness details section of SBA’s Paycheck Protection Program page, you must use no less than 60% of the loan amount to cover the payroll costs listed above.

      Additionally, reductions in employee salary may also affect your eligible forgiveness amount. Be aware that a reduction of 25% or more in annual salary (compared to their most recent full quarter) for employees who make less than $100k/year will reduce the loan forgiveness amount.

      If you laid off employees or reduced payroll beginning February 15, 2020, you may eliminate the forgiveness reduction as long as you rehire the laid-off employees or restore payroll before June 30, 2020.

      All of these details mean you desperately need to stay on top of your books, track your spending, and have a paper trail for every penny received and spent. Fortunately, we’ve got a pretty great tool that can take your bookkeeping to the next level.

      How Sunrise Can Help You

      Backed by Lendio, Sunrise is an online bookkeeping tool packed with handy features to make your PPP loan tracking process a breeze. Gone are the days of drawers stuffed with expense receipts and tax-season panic. Now you can have all of your bookkeeping details in 1 easy-to-use system that won’t cost you a thing. That’s right—it’s absolutely free!

      The Sunrise bookkeeping system boasts a robust tracking feature that’s housed within the core features of the program. To take advantage of it, all you need to do is link your business bank account and credit cards, and all of your expenses and income can be automatically categorized. So if you spend a portion of your loan money to pay an employee and another to cover this month’s office utilities, you’ll know exactly how much went to each and when—which will make reporting a piece of cake.

      Special Features For Better Business 

      More than monitoring the movement of your PPP funds, Sunrise goes above and beyond within the bookkeeping sphere to ensure you have a careful eye on every corner of your operations and make practical, informed decisions when it comes to the welfare of your business. When you sign up, you’ll get:

      Help Managing Your Cash Flow

      How you present yourself to customers says a lot about your business. That’s why Sunrise lets you build customizable invoices so you’re always putting your best foot forward. You can include your logo, as well as business and billing information. Is calculating sales tax giving you a headache? Don’t worry—these invoices can automatically add sales taxes based on the location of your customers. You can also send quotes and estimates to potential clients that easily convert into invoices with 1 click. Having a promotional event or want better invoicing information? Sunrise can easily add discounts, handle refunds, and let you see where your invoices sit—whether they are paid, unpaid, or overdue. You’re in control because you’re in the know.

      Fast-Track Access to Future Capital

      There’s so much red tape surrounding applications for loans, grants, and other forms of financial aid that it would frustrate any business owner. Fortunately, while other small businesses run around in a state of panic or sit around dumbfounded, Sunrise can set you up for success. It will keep and categorize your information with its automatic expense tracking system and financial reports, which you can then use to satisfy some of the application and lending requirements you might encounter. It pays to be prepared.

      Access to a Personal Business Bookkeeper

      Lastly, for business owners who don’t want the hassle of handling their own books or don’t want to handle the process of tracking their PPP loan on their own, Sunrise has a solution. Starting at only $149 per month, you can sync expenses and off-load a chunk of your responsibilities to a real live bookkeeping expert. These professionals can handle the monthly closing of your books, help with your taxes, and answer all of your bookkeeping questions by email or text.


      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.
      About the author

      Lendio's team of experts is here to help you with every nook and cranny of your business. We'll make sure you have the best advice for financing, operations, management, hiring, and much more.

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