Amid the coronavirus (COVID-19) crisis, many businesses swiftly took advantage of the Small Business Association’s (SBA) Paycheck Protection Program (PPP) before the program ran out of funding. Perhaps you are among the quick and lucky, and your business has been approved for a PPP loan. If so, congratulations! The application process was arduous, and you made it through. Unfortunately, the documentation burden doesn’t stop at loan approval. In fact, you are just getting started.

What should you do next?


  • Download XMI’s PPP Expense Tracker
  • Obtain lender specific documentation requirements.
  • Ask your lender to time the origination of the loan to help you best maximize your ability to spend funds on payroll. The SBA currently requires lenders to fund loans within 10 days of approval.
  • Determine your “covered period,” the eight-week period beginning on the date of the loan’s origination, for loan forgiveness purposes.
  • Determine your full-time equivalents (FTEs) for the applicable test periods, February 15, 2019 through June 30, 2019 or January 1, 2020 through February 29, 2020. You have an option – track both and choose the most advantageous.
  • Define a process to track monthly average FTEs throughout the eight-week covered period.
  • Consider whether rehiring is needed and take action immediately.
  • Keep the 75% threshold in mind – you must spend 75% of loan proceeds on payroll costs.
  • Do not use PPP funds for paid leave benefits under the Families First Coronavirus Response Act.
  • Communicate with your payroll provider to make sure that payroll reports are designed to support PPP expense tracking.
  • Document every disbursement – dollar amounts, timing, and deductibility – as if you were preparing for an audit. You can track PPP expenses as well as FTEs, salary thresholds, and the covered period using XMI’s PPP Expense Tracker. Download the PPP Expense Tracker from the resource list here.
  • For non-payroll costs, such as rent, mortgage interest, or utilities, you should be prepared to substantiate with an invoice and supporting agreements, such as a lease, loan documents, or a service contract.

Given how much has changed in the first phase of the COVID-19 pandemic, it’s safe to assume that more changes are coming. To be ready, you should:

  • Check in regularly with your lender to be advised of any changes to the documentation requirements for loan forgiveness.
  • Periodically check the SBA website for additional developments.
  • Consider how new operational challenges may impact loan forgiveness. For example, you may decide to forgo partial or full forgiveness because you are forced to reduce headcount. If you aren’t sure what the best path is to maximize cash in your business, compare the savings from reducing headcount versus the cost of forgoing loan forgiveness. Beyond the operational considerations, there are many variables in this equation, such as employee benefits (some employers are opting to continue providing and paying for employee benefits during COVID-19 furloughs) and loan interest. And there’s the painful analysis of whom to offboard and how. Download the XMI COVID-19 Guide to Employee Exits for help with this.

Finally, make sure your accountant or CPA provides guidance on how to properly record loan proceeds and the related liability, as well as the eventual forgiveness.

At XMI, our aim is to make work easy – through good times and bad. Our expert team of outsourced accounting professionals do much more than just gather your loan materials. We provide strategic growth planning, comprehensive accounting optimization, and up-to-date guidance based on the latest available SBA information and legislation. If you’re in need of an accounting partner to help you navigate the chaos, contact XMI today.

Download XMI's PPP Expense Tracker!

Download our free PPP Expense Tracker to track PPP eligible expenses and estimate the amount of your loan that may be eligible for forgiveness.


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