How to Maximize PPP Loan Forgiveness

As a business owner, you and your employees have been diligently working to maximize the loan available under the Paycheck Protection Program (PPP), but after a company has been approved by the Small Business Administration (SBA), the work doesn’t stop. The lender has 10 calendars days to make the first disbursement, which starts the company’s 8-week covered period. From that point onward, your 8 weeks to maximize loan forgiveness is running out.

Up to the full amount of both principal and interest can be forgiven if PPP loan proceeds are used on allowable uses and you maintain your workforce and their salaries. As an added benefit, the partial or full loan forgiveness will not be recognized as taxable income for federal purposes.

So how should companies facilitate the tracking of the related expenses to safeguard the forgiveness of PPP loans?

Once the loan has been distributed, companies need to ensure that use of every dollar of the funds is tracked so that you can provide the proper documentation to the lender when applying for loan forgiveness. Be proactive and discuss with your lender what documentation they will require to support the forgiveness.  The CARES Act includes some of the documentation required, but your lender may require additional information.  Understanding the documentation requirements of both the CARES Act and your PPP loan lender will enable you to properly track allowable uses and locate supporting documentation.

A couple of best practices include:

  • Track PPP expenses by establishing new and separate general ledger accounts, coding or classification within the company’s accounting system. Doing so will allow the company to segregate the funds and easily track expenses without comingling. 
  • Accounting departments and staff should ensure that additional support for the expenses is maintained either electronically or hard-copied in a separate folder. 
  • Companies should talk with payroll providers to ensure that required payroll information is tracked in accordance with the CARES Act, since allowable payrolls costs aren’t as simple as the employee’s gross or net pay. For additional information on allowable costs, see Schneider Downs’ previous Our Thoughts On article: Important Update on the Payroll Protection Program Under the CARES Act
  • Ensure that you’re aware of the rules relative to the reduction of headcount and salaries and the re-hire exemption. For additional information on these rules, see Schneider Downs’ previous Our Thoughts On article: Paycheck Protection Program – Loan Forgiveness.

Please visit our Coronavirus resource page at for related content.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Some Things You Probably Aren’t Thinking About as a Dealer When It Comes to the Rise in Interest Rates
Construction BY Todd Lucas
Observations From Our Construction Accounting Practice
Lincoln College Closes Due to Ransomware Attack
Is There Additional COVID-19 Relief Incoming?
The Pandemic’s Impact on Contractors’ Backlogs
Important Tax Savings News for the Construction Industry: Meals Portion of Per Diem Rate or Allowance Now 100% Deductible for 2021 and 2022
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.