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How do I record my PPP loan

How do I record the PPP loan and the usage of funds from it on my books. Can you please provide a link backing up your answer as I’ve had many different versions of how to record and how to record against the usage of the PPP/usuage of the PPP

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Answer

  1. 73 Answers

    Hi the initial PPP Loan should be set up on the balance sheet as a liability. You do not record the usage until you have received notice that the funds have been forgiven. When you apply for PPP loan forgiveness the lender will have you complete the form with the details of how the funds were spent. When you received notification that all or some of the expenses have been approved for forgiveness you will then reclass the forgiven amount and post them against the loan account. For example, if you have $5,000 in rent and $10,000 in payroll you will Credit both the rent and payroll GL accounts and Debit the PPP-Loan G/L account. If the loan is 100% forgiven all amount posted to the PPP loan account should make the liability account zero. If by chance the entire amount is not forgiven then you will have a balance left in the PPP Loan liability account for the portion that was not forgiven and would need to be repaid.

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