We have helped many of you complete your applications for the PPP loans, and we are delighted that so many of you have been approved.
We have been getting questions from clients who have received PPP loans about how to proceed. We put together this list of frequently asked questions to help answer your questions.
Will my PPP loan be forgiven?
The PPP program has the potential for the loan to be fully forgiven, provided you use the funds appropriately over the first 8 weeks.
The loan forgiveness is not automatic.
You
need to apply
for forgiveness and provide
documentation to back up your claim
that the funds were used for approved expenses.
Do I need to change banks for depositing PPP funds?
Only if your PPP loan is through another bank and that bank requires you to transfer your account. If you are not required to change banks, we strongly recommend that you do not.
I'm not changing banks, but do I need to have a separate bank account for depositing PPP funds?
Some banks require a separate bank account for depositing the PPP funds. If so, do not use that account to pay for expenses that do not qualify for forgiveness, such as dues or advertising. This is an imperfect system: because it is not possible to split up your payroll between wages, taxes, and fees, you will need to keep close track of your expenses. You will be paying those non-eligible taxes out of the PPP fund account, but you will not be able to apply them to the loan. If you are not maintaining a separate bank account, set up a spreadsheet or work with your bookkeeper to track your expenses.
What should I do if I am setting up a new bank account?
If you are setting up a new bank account, we must have a
new ACH form
signed by you, and a
voided check submitted to PayPlus
.
Do not send the form to NatPay
even though that's what the form says. Send it to your Payroll Specialist and we will submit it for you.
You must submit the change form at least 3 days prior to your check date.
I would like to change banks just for the 8-week period of the PPP loan. Is that possible?
Yes, it is possible but not recommended unless the bank requires you to do so. It is your responsibility to send us a new
ACH form
and voided check at the end of the 8 weeks (at least 3 days prior to your check date) and to ensure that you have sufficient funds in the account. If your payroll bounces due to insufficient funds because you used up the PPP funds, you will need to pay the NSF (insufficient funds) fee.
What if I just add a bank account instead of changing the account?
At least 3 days before your check date, send us a signed
ACH form
to authorize the change. You are responsible for ensuring
that you have sufficient funds in the account. If your payroll bounces due to insufficient funds, you will need to pay the NSF (insufficient funds) fee.
How can I use the PPP funds?
How you use the funds during this 8-week period determines how much, if any, of your loan will be forgiven. You must spend at least 75% of the funds on payroll. The remaining 25% can be used on rent, utilities, and mortgage interest in addition to the employer-paid match from a 401k or SIMPLE IRA plan. What constitutes “utilities” is still open for clarification. Your bank can advise you what utilities are acceptable.
Where can I get a breakdown of taxes, invoice fees, etc?
You can get your
payroll expenses from the payroll reports you receive each pay period.
If you use Employer on the Go, you can generate the reports yourself from the Report Wizard.
Save those records now and so you won’t have to scramble to get them in June or July.
What records should I keep?
You will need to keep accurate payroll reports and invoices from rent and utilities.
We strongly advise you to keep accurate records
,
because you will need to account in extreme detail how you use the loan funds. Every bank has different requirements for what records to keep. Review those requirements and
start collecting the records and receipts now
.
Will PayPlus keep track of my PPP expenses for me?
No. This is your responsibility. Work with your bookkeeper, who will have your rent and utilities expenses (which we do not) to track eligible PPP expenses.
When does the loan countdown start?
Your 8-week countdown starts from the day you are funded (receive the PPP funds). If you were funded on April 17
th
, your measurement period ends June 12, 2020. The 8-week deadline goes by the check date (pay date), not the pay period.
Can I use loan funds after the 8-week period?
No. You must spend those funds by the end of the 8 weeks.
What should I do if my pay cycle does not coincide with the end of the 8-week period?
If your pay cycle does not coincide with the end of the 8-week period, we can run an extra payroll (at the usual fee) or we can double up entries on your last payroll. We cannot include any payroll that is dated after the 8-week period.
Will PayPlus keep track of the 8-week period for me?
No, this is your responsibility. Our clients are all on different schedules for when they received PPP funds, and we do not have that information.
What payroll-related expenses can be applied to the loan?
You can include gross wages, MA SUTA, MA Health, and other state unemployment taxes. You can also include the employer match on 401K or Simple IRA benefits. You cannot include other taxes (federal, FICA, Medicare, PFML) or the payroll processing invoice fee.
Are there any limits for paying an individual employee with PPP funds?
Yes. The maximum pay for any one employee over the 8 weeks is $15,384.64. This is calculated based on 8 weeks of pay for an employee earning $100,000/year. The $100,000 was the cap used in the loan calculation. This $100,000 limit applies to any one employee's annual pay, not your total payroll.
My employees have filed for unemployment. How does that affect my PPP loan?
You cannot use PPP funds to pay an employee for the same week they are collecting unemployment. PPP is an acronym for Paycheck Protection Program; it is intended to provide funds to keep employees on the payroll and off the unemployment rolls.
Now that I have PPP funds, I will re-activate employees I furloughed. How do I do that?
Submit a
New Hire/Change form to your Payroll Specialist for each employee you furloughed so that we can re-activate them in our system.
Here is a
guide
for small businesses about the loan program.
For past emails from us regarding Covid-19 programs, see our
blog
.
If you need assistance, or additional payroll reports including a Payroll Expenses report by month, please reach out to your Payroll Specialist.
We wish you and your families continued good health. We will get through this together.
Thank you as always for the trust and confidence you place in our team.
Sincerely,
Leslie, Greg, Melissa, and Judy
