The new PPP forgiveness application instructions require borrowers to retain all records relating to the loan, including all documentation necessary to support the borrower’s certifications on necessity, for six years after the date that the loan is forgiven or repaid in full.
How do I keep track of PPP loan expenses?
Best Practices for Tracking PPP Expenses
- Deposit received funds into a separate checking account dedicated to the PPP loan proceeds.
- Track expenses in your general ledger.
- Maintain a “journal” of the effects COVID-19 has had on your business.
- Maintain adequate records for support of payroll costs.
How long do companies have to keep PPP loans?
24 weeks
The bill extends the length of time businesses have to use the loans, to 24 weeks from eight weeks, and pushes back a June 30 deadline to rehire workers. It also reduces the share of funding that must be directed toward payroll costs, to 60% from 75%.
What happens if PPP loan is not forgiven?
If you don’t apply for loan forgiveness, your loan payments will be deferred for 10 months after the end of your selected covered period (8 or 24 weeks, depending on your loan) No collateral or personal guarantees are required. The government and lenders are not allowed to charge you any fees for your loan.
What do you do with PPP loan funds?
Make the check payable to the PPP Lender directly from the business checking where the funds were originally deposited. Make the check number PPP check. You’ll see why we are doing this a little later.
How to write a check for PPP loan forgiveness?
First, create an “Other Income” account in your chart of accounts called, PPP Loan Forgiveness. Then go to your check register and write the check. PPP funds $25,000 and PPP Loan forgiveness -$25,000. Here’s a little video to show you what it looks like in Quickbooks Online. Use Up/Down Arrow keys to increase or decrease volume.
How can I record my PPP loan expenses?
You can also use the spreadsheet provided earlier to record all expenses which will help make sure you are organized and ready to apply for forgiveness. Once all the PPP funds are used up, your lender will ask you to show how you spent the PPP funds.
Can a separate expense account be used for PPP?
You can use a separate expense account to record eligible expenses. Before you commit to software, be sure it’s capable of tracking PPP loan information. Even if you’re not tracking PPP loan expenses or planning on taking out a loan, accounting software can be a helpful tool for your business.