Paycheck Protection Program (PPP) Loans: What You Need to Know

May 13, 2020

Paycheck Protection Program (PPP) Loans: What You Need to Know

By: Bruce J. Legawiec, Osborne Rincon CPAs

By now, most businesses have heard of the CARES Act program PPP.  Round 1 of PPP loans opened in mid-April, and within a few weeks, all funds – $349 billion – had been exhausted. On April 24, 2020, an additional $310 billion was made available for PPP loans.

While there was a mad rush for Round 1 of funding, the rush for Round 2 has slowed and funds are still available as of May 11, 2020 – not because the funds are not needed by businesses – but perhaps in response to the uncertainty of loan forgiveness.  When a qualified business receives a PPP loan, the entire amount of the loan may qualify for forgiveness when used for “Qualified Expenses” during the “Covered Period.” 

Qualified Expenses include: payroll costs, (including health insurance and retirement contributions), rent, utilities and interest on debts in existence on February 15, 2020. The “Covered Period” is the 8-week period immediately after the funds are received.  Another key requirement is that a business must meet certain levels of employees – termed FTE – Full Time Equivalents. If a business cannot retain its FTE level or does not restore to full FTE level by June 30, 2020, then a portion of the loan will not be forgiven, even if used for “Qualified Expenses” during the “Covered Period.”

For any business that has received PPP funds, it is extremely important that they have a clear understanding of the requirements for loan forgiveness and how to best meet the requirements. I would also like to point out that the American Institute of Certified Public Accountants (AICPA) has written to the Treasury and Congress asking for more clarification and simplification. Hopefully, action will be taken that is helpful to businesses in navigating the maze of PPP loan forgiveness.

Bruce J. Legawiec, CPA, is a Partner with Osborne Rincon CPAs and has over 30 years of diverse public accounting experience. Osborne Rincon is one of the oldest and most respected full-service accounting firms in the Coachella Valley. To learn more, call (760) 777-7805 or go to

Last modified: May 13, 2020

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