The proceeds for the PPP loan can be used for payroll costs, group health benefits, mortgage interest, rent, utilities, other interest, refinancing an EIDL loan. At least 75% of the money needs to be used for payroll.
Some of the questions I'm thinking about include:
- When precisely does the 8 week period begin? When the loan is approved? When the funds are received?
- What constitutes "utilities"? There are the obvious ones like electricity and water, but what about phone and Internet? If phone service counts, does wireless? What if your phone bill includes monthly payments for the equipment?
- Utility bills and other expenses aren't going to line up perfectly with the 8-week window, so any bill paid may include a period of time outside of that time frame. Is forgiveness based on an accrual calculation? Or is it a cash basis? If a cash-basis, can bill payments be deferred or pulled forward such that it happens in the time window and can be forgiven?
- If there are excess funds after payroll and other allowed costs, can the remainder be used to pay bonuses or add additional employees? For example, if we receive $200K and it looks like we're only going to spend $180K, can we dole out the remaining $20K by giving each employee a bonus at some point during the 8-week window?
- Can retirement contributions be pulled forward? If we make quarterly or annual contributions to retirement, can the the timing of those payments be adjusted to land within the 8-week window?
- Does "group health benefits" strictly mean just the premium paid to the insurance company for a group plan? Can it include employer contributions to an HSA? Or reimbursement of premiums paid by employees under a health reimbursement arrangement?
- With regards to rent, what if the property is rented from an entity owned by the same controlled group of owners?
- Other than the $100K limit on compensation, are there any prohibitions on the business owner participating in payroll or benefits? If there are excess funds, what is to stop the owner from giving themselves a pay increase, subject to the limit?