Yes, You Can Use a PPP Loan for Expenses Other Than Payroll

Paycheck Protection Program (PPP) loans are designed to help small businesses—and nonprofits—keep employees on the payroll, but what exactly does that mean? While the loans are intended largely for payroll-related costs like salaries and health insurance premiums, you can actually use a PPP loan to cover a wide range of pandemic-related operating costs.

Allowed Uses for a PPP Loan

While you will need to spend 60% of the loan funds on payroll costs, you can spend the other 40% of your loan on a variety of other pandemic-related costs, all of which are considered “allowed uses” for the loan.

Costs Other Than Payroll Included in Allowed Uses

• Healthcare costs related to the continuation of group healthcare benefits, including insurance premiums
• Rent
• Utilities
• Mortgage interest payments (payments toward a mortgage principal are not eligible for forgiveness)
• Interest on any debt obligations incurred prior to February 15, 2020
• Refinancing for an EIDL received from January 3, 2020, to April 3, 2020
• Covered expenses like business software or cloud computing services that assist you in:
  • Business operations
  • Product or service delivery
  • The processing, payment, or tracking of payroll expended, human resources, sales, and billing functions
  • Accounting or tracking of supplies, inventory, records, or expenses
• Covered property damage costs
• Covered supplier costs
• Covered worker protection expenditures

Payroll Costs Included in Allowed Uses

• Compensation: salaries, wages, commissions, tips, etc., up to $100,000/employee annually ($8,333/month). 
• Paid time off: vacation, parental, family, medical, or sick leave
• Separation or dismissal allowances
• Payments towards retirement benefits
• Group vision, dental, disability, or life insurance
• Taxes: payment of state or local taxes assessed on the compensation of employees

Loan Forgiveness

Loans funds used on eligible uses during the covered period may qualify for loan forgiveness. Due to the demand for PPP loans and loan forgiveness, you may need to spend at least 60% of loan funds on payroll-related expenses to qualify for forgiveness. 

What’s the covered period? It’s the 24-weeks directly following the disbursement of your PPP loan. To learn more about loan forgiveness, visit the PPP Loan Forgiveness page. 

Ready to take the first step toward your potentially-forgivable loan? Apply now.