Quick Answer: Can I Give My Employees A Raise With PPP Loan?

What does the PPP loan cover?

PPP loans covers payroll costs, including costs for employee vacation, parental, family, medical, and sick leave.

However, the CARES Act excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127)..

What if an employee quits during the PPP loan?

The Paycheck Protection Program Flexibility Act and exemptions to loan forgiveness reductions. … Now, business owners will not face loan forgiveness reductions if their employees voluntarily resign, don’t accept a good faith rehiring offer, or are fired/let go with cause.

How much of the PPP loan can be used for payroll?

60%At least 60% of your PPP loan must be used for payroll costs and the remainder must only be used for qualifying non-payroll costs. Businesses have up to 24 weeks from the date you received the loan to spend the funds and be eligible for loan forgiveness.

What PPP loan means for employees?

Payment Protection ProgramAs part of the $2 trillion aid package unveiled in the Coronavirus Aid Relief & Economic Security (CARES) Act, $349 billion was dedicated to the Payment Protection Program (PPP). This offers federal guaranteed loans to businesses with fewer than 500 employees to cover payroll and other essential costs.

Can I pay my employees more with the PPP loan?

Yes, you can hire additional employees during the 8-week covered period and any eligible payroll costs associated with them are eligible for forgiveness. 12) Must PPP loan proceeds be spent within the 8 weeks after receiving the funds?

How does a PPP loan affect employees?

When your company gets a PPP loan, it can affect you in several ways. … You’re unlikely to get furloughed or laid off if your company received a loan, but it may decrease your pay rate — that said, some employers may choose to give raises to employees to entice them to come back to work.

Can all of PPP loan be used for payroll?

The funds from the PPP can be used for the following purposes: Payroll—salary, wage, vacation, parental, family, medical, or sick leave, health benefits. Mortgage interest—as long as the mortgage was signed before February 15, 2020.

What is the deadline for PPP loan forgiveness?

October 31, 2020Question: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner. Is October 31, 2020 the deadline for borrowers to apply for forgiveness? Answer: No.

How do I return a PPP loan?

How To Return Your PPP Funds. Contact whichever lender through which you applied for your PPP loan. They can guide you through the process of returning your funds to the Treasury Department.

Can 100 percent of PPP loan be used for payroll?

PPP loans are 100 percent forgivable if all the proceeds are used for qualifying payroll and benefit costs (using the definitions above), and permitted mortgage interest (but not principal), rent, and utility payments during the Covered Period, provided that at least 60 percent of the proceeds are used for qualifying …

Can 100% of PPP loan be used for payroll?

1. Use it for eligible expenses. For PPP loan forgiveness, you must use 100% of the loan for eligible expenses. Eligible expenses include payroll costs, interest on mortgages, rent, and utilities.

Can you spend 100% PPP on payroll?

It is acceptable to spend 100% of the proceeds on payroll costs. The only SBA restriction is that at least 75% of the proceeds have to be spent on payroll costs. What if I do not spend 100% of the loan proceeds on covered costs? There is no clear guidance on what you are required to do with the excess.

How are PPP loans calculated?

How PPP loans are calculated. PPP loans are calculated using the average monthly cost of the salaries of you and your employees. But if you’re a sole proprietor, your PPP loan will be calculated based on your business’ net profit. Your salary as an owner will be defined through the way your business is taxed.

How do you maximize PPP loan forgiveness?

7 ways small businesses can maximize PPP loan forgivenessDon’t short yourself on allowable payroll costs. … But don’t go beyond PPP payroll boundaries. … Maintain your staffing. … Avoid drastic pay cuts. … Focus most of your PPP loan on payroll. … Stay within allowable expenses for the rest of your PPP loan amount. … If necessary, forge ahead without loan forgiveness.

Do employees have to work for PPP loan?

Employers don’t have to require employees to do work when it’s paying them with PPP funds — but as discussed last week, if there’s work to be done, the employer can require it, even if it’s not the same work you usually perform.

Can I return my PPP loan and get unemployment?

Yes, but proceed with caution. There is no restriction on receiving both benefits, but you cannot use the PPP loan to cover your own compensation while at the same time receiving unemployment benefits.