Wow!  It’s a day of really technical questions from you.  And that requires detailed research to make sure our posts are accurate.  So be patient, but keep checking back because there are lots of things in the pipeline.  Let’s start here.

As you begin to receive your PPP proceeds we see confusion that is being generated from conflicting sections of the regs.  Namely—the permitted uses and the forgivable expenditures are not the same.  They vary so slightly that it makes it all the more confusing.  Here are the lists.

PERMITTED USES of PPP funds:

• Payroll costs (salary/wages, health insurance, retirement, state taxes)
• Mortgage interest (normal interest—no prepayments or principal payments)
• Rent
• Utilities
• Interest on other debt obligations incurred before 2/15/20

Possible FORGIVABLE ASPECT of PPP funds provided other conditions are met:

• Payroll costs (salary/wages, health insurance, retirement, state taxes)
• Mortgage interest (normal interest—no prepayments or principal payments)
• Rent
• Utilities

You’ll notice the forgivable list is short by the last permitted item—interest on other debt (not mortgages).  So for instance, if you use the funds to pay your BOA equipment loan interest, that’s ok, but that portion will not be forgiven.  And you are not allowed to pay your BOA equipment loan principal portion.  For the most part, loans are currently in deferment so it’s not an issue, but something we want to bring to your attention.  If you do have a loan or mortgage payment you want to pay with your PPP funds, we would recommend transferring to your PPP account from your operating account an amount equal to the principal portion of your current payment.  This would allow you to write the entire payment from the PPP account without violating the permitted use provision.  If you go this route, please transfer in the exact amount of principal, not just a round figure.