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PPP Loan Forgiveness: How To Track Expenses for Maximum PPP Loan Forgiveness

Updated: May 16

There are many small businesses that are getting PPP loans. Besides, there are even more businesses that are lining up to receive funds in the second round. If you have applied for this loan or are considering it, remember, the purpose of this loan is to save jobs! It’s important to make sure that if you get money on the loan, you track the amount correctly. Thus, there can be loan forgiveness for this type.

Disbursement compliance is essential. Do not spend this money without any consideration. Do it right. Make sure there isn't any cheating in this slap show. That means you need to prove and clarify how you spend this money.

According to the forgiveness details section of SBA’s Paycheck Protection Program page, you must use no less than 75% of the loan amount to cover the payroll costs listed above. Therefore, if you get a PPP loan, you must spend at least 75% of your loan funds on the payroll if you want your loan to be forgiven completely.

Here are a few things you need to know as soon as possible so these funds can be forgiven:

1) For your PPP funds to qualify for forgiveness, you must spend them on eligible expenses within the covered period. For up to ten months after the final due date, all payments (principal and interest) will be deferred if you wait to apply. If you apply for forgiveness before you begin repayment, any payments are halted until the Small Business Administration (SBA) decides whether to forgive the loan.

There are several options for your covered period:

  • 8-week minimum: The shortest covered period available is 8-weeks. Your covered period may not be less than an 8-week period.

  • 24-week maximum: The longest covered period available is 24-weeks. Your covered period cannot extend beyond 24-weeks.

  • Anywhere in between: You have the option to choose a covered period for any time frame between 8 and 24 weeks (e.g., 12 weeks, 20 weeks, etc.)

For a better understanding of when repayments start, here are a few examples:

PPP Loan Disbursement

To calculate your own repayment days and covered period, you can use this calculator.

2) They cannot be spent on anything besides:

  • Payroll (capped at $100,000 annually per employee)

  • Healthcare benefits (including premiums for insurance)

  • Rental/mortgage interest (business only)

  • Rent and utilities (for business locations)




3) You cannot spend all of the PPP funds for your own or your employees' rewards. It is important to note that if PPP forgiveness is applied, it will apply to annual figures and not just to those spent in the next 8 weeks. It is for this reason that they require payroll numbers before making a loan. The way to calculate forgiveness for this is by comparing loan payroll numbers before posting loan payroll numbers. Moreover, It is unethical to get your employees laid off and increasing your own pay, it goes against the purpose of the program. Your forgivable amount would be reduced if the number of workers was lower than before.

4) You should be able to keep more than 75% of your salary figure (remember this is called a “Payroll Protection Plan” for a reason). And also you must certify that you did not reduce employee pay to under 75% of their pre-COVID wages.5) Excellent bookkeeping is clearly important here. This is NOT the time to cut corners on that front.

5) Excellent bookkeeping is clearly important here. This is NOT the time to cut corners on that front.

Now that we've covered that, I want to give you some tips and tricks on how to track information. Here are some things you can do to help get things on track for forgiveness.

  • In your accounting software, set up a separate income account for the PPP loan. Also, create special expense accounts for PPP loans. Attach all receipts and invoices for these transactions as proof of where the money went. This is probably the easiest way to keep track of where money is coming from and going.

  • Track every penny for those 8 weeks. After the 8 weeks are up, you need to contact your lender and ask for forgiveness information. This is when the lender will ask for proof of how the funds were used.

  • Now, after the 8 weeks, if the money remaining becomes unforgivable, it is extremely important to keep an eye on how the money is ultimately spent. Mainly because if you are found to have intentionally misused funds, you could be held liable for it.

Last but not least, if you’d rather not be bothered with your own books or not bothered with tracking your PPP loan on your own, Irvine Bookkeeping can help. By off-loading some of your bookkeeping responsibilities to a real person, you can sync expenses and give yourself more free time. Professionals can handle the monthly closing of your books, assist with your taxes, and answer all of your bookkeeping questions via email or text. It's almost like you have an accountant on your phone.

Irvine Bookkeeping is a bookkeeping and tax services firm, we provide accurate and reliable accounting services to help our clients to have better control and knowledge of their company finances. At Irvine Bookkeeping, we are working to save your time and money. Once you are free from financial troubles, you have more opportunities to grow your business bigger and stronger.


If you, as a business owner, see that you cannot handle accounting on your own, consider hiring an accountancy service for contractors to help you with it.

Call Irvine Bookkeeping now for a Free Quote!


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