Q. Assuming I properly received PPP funds, what can I spend it on?
A. The allowable uses of PPP loan funds are as follows:
- 75% of the PPP loan funds must be used for payroll costs for U.S. resident employees (salaries are capped at $100,000 per employee),
- The remaining 25% may be spent on:
- Costs related to the continuation of group health care benefits during periods of paid sick, medical or family leave (other than qualified family or sick leave wages for which a credit is allowed under Sections 7001 or 7003 of the Families First Coronavirus Response Act), and insurance premiums
- Payment of interest on any mortgage obligation (but not on any prepayment of principal)
- Interest on any other debt incurred before Feb. 15, 2020
Q. If a use is allowable, does that mean my loan is forgiven?
A. Not necessarily. Debt forgiveness hinges on a number of factors and a more limited set of uses. See the related questions below.
Q. What if I use the loan, in whole or in part, for a purpose that is not an allowable purpose?
A. You should not use the loan for purposes that are not allowable uses. It creates the possibility that you could face civil and criminal penalties for fraud if the government believes you knowingly used the loan for uses that are not allowable.
Q. What are the terms of my PPP loan?
A. PPP loans have a term of two years, bear interest at 1% per annum and require no principal payments for the first six months, although interest accrues.
Read the full GT Alert, “Now That I Have My Paycheck Protection Program Money, What Can I Do with It?“