Yes, you can apply for both the PPP and the EIDL, but you are not allowed to double dip. This means that you cannot use funds received for the same purpose. Also, the SBA explains, “businesses that receive an EIDL Advance in addition to the PPP loan will have the amount of the EIDL Advance subtracted from the forgiveness amount of their PPP loan”.

You are allowed to deduct eligible expenses paid with both PPP and EIDL funds and the amount you receive is not taxable.

Yes. According to the SBA, “A small business can apply for an EIDL loan and later elect not to “close” or accept that loan. If they requested and received an EIDL Advance (by checking the request box within the EIDL loan application), that amount does not need to be repaid. There would only be a balance due if they accepted the full amount of the EIDL loan.”

The PPP was primarily designed to incentivize business owners to keep their employees on payroll. Once you receive your PPP loan and spend the full amount (with at least 60% of that amount being used for payroll costs), you are eligible to apply to have your loan forgiven—meaning you are no longer required to repay it.

You can apply for forgiveness once you’ve used the full amount of your PPP loan up to the maturity date of the loan. According to the SBA, “if borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers will begin making loan payments to their PPP lender”.

The SBA defines the “Covered Period” as “the date the loan was originally disbursed. It ends on a date selected by the Borrower that is at least 8 weeks following the date of loan disbursement and not more than 24 weeks after the date of loan disbursement.

For example, if the Borrower received their PPP loan proceeds on Monday, April 20, 2020, the first day of the Covered Period is Monday, April 20, 2020 and the final day of the Covered Period is any date selected by the Borrower between Sunday, June 14, 2020 and Sunday, October 4, 2020.”

Yes, both First Draw and Second Draw PPP loans can be forgiven. The forgiveness requirements are the same for both loans.

In order to qualify for full PPP loan forgiveness, you must spend a minimum of 60% of your funds on payroll. The remaining 40% can be spent on non-payroll eligible expenses.

Payroll Costs (60% of loan amount):

Salary, wages, commissions, bonuses, and tips (Note: you cannot include any compensation in excess of $100,000 per employee.)
Payment for retirement benefits
Allowance for dismissal or separation
Payment for time off for vacation, family leave, and medical leave
Payment of state and local tax associated with the compensation of employees.
Costs for group healthcare benefits such as vision, dental insurance, or disability

Non-Payroll Eligible Expenses (40% of loan amount):

Rent
Utilities
Operating costs including cloud computing, human resources, or inventory management
Mortgage interest
Covered supplier costs
Property damage costs due to looting or vandalism during the events of 2020
PPE expenditures to protect employees

In the new stimulus package that was passed, a stipulation was included that states that those businesses that did not receive forgiveness of their PPP loans can now claim a tax credit. We recommend consulting with your accountant for more information.

In addition to the loan forgiveness application, you’ll need to provide certain documentation as proof of how your PPP funds were spent.

For Payroll Expenses You May Need:

Bank account statements
Third-party payroll service provider reports showing the amount paid to employees
Tax forms
Any documentation that shows the amount of employer contributions to employee health insurance and retirement plans if you’ve included these in your PPP loan calculations

For Non-Payroll Expenses You May Need:

Proof of business mortgage interest payments
Proof of rent or lease payments
Proof of utility payments
Receipts for covered expenses such as PPE expenditures for employees or supplier costs

Contact your lender directly to verify which forgiveness application form you need to fill out. Your lender will guide you through the process and help you figure out which documents you need to provide along with the forgiveness application.