PPP Funding – Next Steps for Recipients

Please note: This blog is current to the date of its publication, Thursday, April 23. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.


As mentioned in our last post, the Small Business Administration (SBA) has guaranteed more than one million loans through the Paycheck Protection Program (PPP), exhausting all initial funding by April 16, with additional funding recently approved. If your organization obtains funding, it’s critical to follow appropriate procedures to ensure compliance and potential loan forgiveness. Below, we’ve outlined recommended next steps for PPP recipients.

Step One – Document a self-assessment of need. PPP applicants are required to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant,” and organizations should document reasoning behind this assessment.

Step Two – Identify and calculate allowable, forgivable costs of which 75% must relate to payroll expenses, assuming employee and compensation levels are maintained. The remaining 25% can be used for rent, mortgage interest and utility costs over the eight-week period following the date of loan receipt.

Step Three – Track allowable costs and maintain substantiating documentation. PPP funds and allowable expenses can be processed through a separate bank account and/or tracked in your accounting system. It’s important to maintain documentation to support expenditures such as invoices, payroll records and related calculations.

Step Four – Record the PPP loan in your general ledger. PPP funds are technically a loan and should be recorded as a liability until allowable, forgivable costs are expended, at which time revenue can be recognized. However, the actual amount of loan forgiveness will be determined by the lender based on assessment of borrower documentation.

Step Five – File an application with the lender after the eight-week period to request the forgiveness amount. Reporting requirements for loan forgiveness could be specific to each lender, similar to the application requirements and processes. Banks are required to make a determination within 60 days of the forgiveness application submission.

COVID-19 assistance programs like the PPP are comprehensive and can be complex to navigate, but SST is here to help. We’re closely monitoring any updates and encourage you to contact us with any questions or concerns.

Thanks to SST Partner Emily Cook for providing the content for this blog post. Click here to learn more about Emily.