The SBA’s Paycheck Protection Program works through local banks to support small businesses and non-profits with a forgivable loan to cover eight weeks of payroll, rent and utilities. Each recipient will be required to document the use of the funds in order to seek forgiveness of the loan. Step-by-step instructions for QuickBooks entry simplifies the reporting:
- In QB, add your bank as a Customer. (If they’re already listed as a Vendor, list them as “Bank Name CUST”.)
- Add a new Job to the Customer, called SBA PPP.
- In the Chart of Accounts, add two new accounts:
- Type = Loan, Account name = SBA PPP Loan. This will be listed as an “Other Current Liability.”
- Type =Income, Account name = Forgivable Loan Proceeds
- From the Company drop-down menu, choose Make General Journal Entries …
- Date = one day before 24 weeks after the loan origination date. (Note that if loan originates on a Friday, end date will be on Thursday)
- Line 1: Account = SBA PPP Loan, debit = amount of loan, name = SBA PPP
- Line 2: Account = Forgivable Loan Proceeds, credit = loan amount, name = SBA PPP, class = General Fund
- Save & Close
- Enter a new deposit slip:
- Date of Deposit = Date of Loan Origination (this is very important)
- Received = SBA PPP
- Account = SBA PPP Loan
- Class = blank (classes are only needed for income and expense entries)
- Amount = Loan total
- Save & Close
- Set up a new report:
- Open your memorized report, Statement of Activities (or generate a P&L)
- Click Customize, then Filters
- Name = SBA PPP
- Dates = from the date of Origination to the end date (the day before 24 weeks later)
- On the Display tab, choose Cash Basis
- On the Header/Footer tab, change the Report Title to SBA PPP Loan Detail
- In the top center, click on “Memorize” to memorize the report as a New (do not replace!) report
- For every paycheck, include SBA PPP in the Customer:Job field in the Earnings Window at the top of the Paycheck Detail.
- Since the employer’s part of FICA/MC is not eligible for loan forgiveness, for each payroll
- Run a Payroll Summary report to determine the amount of employer FICA and employer MC
- Make a G/J (it’s in the Company drop-down menu):
- Line 1 Account = FICA/MC Expense, debit = amount of FICA/MC expense for all employees, Name = blank, class = General
- Line 2 Account = FICA/MC Expense, credit = amount of FICA/MC expense for all employees, Name = SBA PPP, uncheck “Billable” box, class = General
- If there are any payroll additions that are taxable income (such as Minister’s housing or SECA), then adjust the memorized G/J entries for the 24-week period by adding SBA PPP to the Name field (and uncheck “Billable”).
- Since the employer’s part of FICA/MC is not eligible for loan forgiveness, for each payroll
- For any employer benefit expenses such as health insurance or retirement, include SBA PPP in the Customer:Job field in the expense tab at the bottom, and uncheck “Billable.” Account = usual expense account and Class = General Fund.
- For every rent or utility (electricity, oil/gas, water/sewer, internet, telephone) bill, include SBA PPP in the Customer:Job field in the expense tab at the bottom, and uncheck “Billable.” Account = usual expense account and Class = General Fund.
- If any employees qualify for sick leave or family leave under the Families First Coronavirus Response Act, then those payroll expenses are not eligible for PPP and should be tagged accordingly.
The memorized report that you created in #5 will show the balance remaining on the loan at the end of the 24 weeks. Verify that at least 60% of the loaned amount will be spent on payroll and no more than 40% is included as utilities/rent/allowable interest expense. Any leftover funds must be repaid within two years. Interest of 1% per year will begin accruing six months after the origination date.
The spreadsheet template has been updated (v5) to include the FFCRA and PPP documentation tabs, as well as the loan forgiveness application.
Assumptions that are not yet verified:
- Payroll and bill payments are based on the date paid (date of paycheck or bill payment), not on the date incurred (dates worked or date of bill).
- If an employee was laid off or paid for fewer hours prior to the loan origination date, the employee can be paid for that time during the 24-week period, and those payments would be included in the amount forgiven.
- If any expenses or payroll are covered by another source (such as a grant), they cannot be double-booked.
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