The Payroll Protection Program of the U.S. Small Business Administration offers federally guaranteed loans that allow small businesses to handle their payroll and other qualifying expenses. The best feature of the loan is that some or all of it can be forgiven if it is used for payroll costs during the current emergency. Here are some tips on how you can maximize the forgiveness of your PPP loan.

Use Software to Manage Your Finances

Utilizing state-of-the-art accounting software is one of the most effective methods of managing your business finances. Be sure to use a program that is able to specifically track PPP loan information.

Separate PPP Loan Funds

Organize the funds and transactions from your PPP loan separately from your other business financial records. There are numerous conditions that must be met for loan forgiveness, and it will be easier to monitor your progress toward forgiveness if you keep your PPP loan funds in a separate ledger.

Consider Your Expenses

To obtain forgiveness for your PPP loan, you need to use at least 75 percent of it for payroll expenses. You can use the rest for other expenses such as rent, mortgage interest, or utilities. However, if you can, use the entire amount for payroll so that you don’t have to repay part of the loan. For maximum forgiveness you should keep up or rehire the same number of employees that you had at the beginning of the year.

Document Your Spending

Be sure to maintain accurate records of everything you spend from your PPP loan. You need to be able to show your lender finance reports, invoices, payroll reports, employee health insurance records, payroll tax filings, and other documentation. You should also keep accurate records on other expenses such as rent, utilities, mortgage, and interest.

Have a Payroll System

Using a payroll service will enable you to handle PPP loan calculations and deductions more easily. This is imperative during the eight weeks of loan coverage, and will also benefit your business’s financial record-keeping in the long term.

For more advice on maximizing your PPP loan forgiveness, contact Whitefish Funding.