New regulations came out yesterday, which have provided some more guidance.
1. The first disbursement should be received no later than 10 days after you’ve been approved.
2. You have eight weeks to use the funds for eligible expenses. The countdown starts on the day the funds were dispersed to you. Eligible expenses of payroll costs, interest on mortgages, rent, utilities and interest on other secured debts. If you do not use the proceeds for eligible expenses within eight weeks, they will need to be repaid.
3. At least 75% of the forgiven amount must have been used for payroll. Payroll costs include gross wages, employee vacation, parental, family, medical and sick leave, costs related to continuing group health care benefits, employer contributions to retirement and state unemployment.
4. Use a separate bank account for PPP funds. Do not commingle them with your other funds. You can use an existing account, that needs to have $0 in it, if you move the funds currently into that account into another. Otherwise, open a new account.
5. Document and label each payment and keep all documentation and receipts. You can pay the funds directly from the account or transfer the funds to your regular checking account to “reimburse” yourself for eligible expenses but always put in the memo or transfer line what the expense is: for example, May rent or 4/30 payroll. Proper documentation of the purpose for which you’ve used the funds is critical to loan forgiveness.
Please give Law Offices of Christy Lee, P.C. a call if you want to audit proof your books to have the best possibility of getting all or some of your loan forgiven. Our focus, as always, is to help your business succeed.