Once you’ve been approved for a PPP loan, here are some good next steps to make sure the next eight weeks go smoothly—and you get your loan forgiven.
1. Connect with your employees
With your new funding in place, you can now be more confident in contacting any employees you had to lay off or put on furlough. Putting your employees back on payroll will not only provide them with stable income for eight weeks, but will also make you eligible for loan forgiveness.
If your business is still closed or operating with reduced capacity, you should still keep as many employees on full payroll as possible to meet the forgiveness requirements, even if those employees can’t fulfill their old responsibilities in the same way. Now is a good time to work on backburner projects that were never a priority before, or even begin work on projects that will set your business up for success post-coronavirus.
Also check that your employees are no longer collecting unemployment benefits—the PPP doesn’t mix with unemployment benefits.
2. Set up a new bank account
In order to get your PPP loan forgiven, you need to prove you spent the funds on the right things—at least 75% on payroll, the remaining 25% on utilities and rent/lease/mortgage interest payments. Having a separate business bank account to hold your PPP deposit will make it easy to track (and more importantly, prove) those expenses.
However, most business owners don’t pay for everything with their debit card. If you use cash, credit cards, PayPal, and other payment methods, you’re going to need a proper bookkeeping and recordkeeping setup.
3. Begin bookkeeping and recordkeeping
In order to get your loan forgiven, you’ll need to not only spend the PPP funds on the right things, but also prove these expenses to your lender.
In order to do so, you’ll need to begin tracking, and categorizing, every expense. A simple bank and credit card statement likely won’t be enough for your lender.
An organized collection of documentation proving your expenses will make processing your claim faster and reduce the chance of a rejection.
Recordkeeping involves noting:
The amount you spent
What you spent it on
You’ll also need to keep track of the receipt/invoice/official record of payment.
4. Apply for forgiveness
Now that you have your employees back on the payroll, and you have a bookkeeping plan in place, you’re ready to start spending your funds. When the time comes for forgiveness, you’ll submit an application with your lender.
5. File your 2019 taxes
If you applied for the PPP with completed (but unfiled) tax forms, go ahead and submit those to the IRS. The sooner you file your return, the sooner you’ll get a refund (if you’re owed one). You’ll also have one less thing to worry about while you run your business over the next few weeks. The tax filing deadline has currently been deferred to July 15, 2020.