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There continues to be a lot of conflicting information regarding the different programs associated with the CARES Act.  We will continue to update this post as we find out more however this money is coming in or has already come in and needs to be accounted for immediately so we wanted to share some of the key things we are doing with PPP, SBA EIDL – the actual loans as well as the EIDL Advance money that some are referring to as Grants.

How to do PPP / EIDL Accounting

  1. For each form of money received (PPP, EID Loan, EIDL Advance) we are creating an account as a current liability, loan payable and naming it per the program money is received from (i.e. PPP Loan)
  2. We are also creating expense accounts for each program/money is received from as other expenses, other misc expenses, and then the name of the program and expenditures (i.e PPP Expenditures)
    • This is where all forgivable expenses will be coded = payroll, rent, etc
    • It needs to be spent during the 8 week window from when the money was received.  We are helping our clients track this and will be updating them on progress.
    • Right now these expenses will not be deductible for taxes – this may change
  3. You DO have to reapply for the forgiveness of loan and show the expense detail.  This will be easy to track and report if all recorded to the PPP Expenditures account.  This will be a similar process to how you applied for the loan and 
  4. When the loan is forgiven the loan amount should be moved to a new account for PPP Other Income.  This income will not be taxable.
  5. If the loan is NOT forgiven or it is not all spent or if they received more than 1 loan then some will stay on the Balance Sheet loan as a low interest loan

If both an EIDL Advance/Grant and the PPP Loan are received, the PPP loan forgiveness amount is REDUCED by the EIDL Advance/Grant amount. This means the PPP loan will not be 100% forgiven if the taxpayer received EIDL Advance/Grant money.

The PPP funds expenditures for payroll do NOT include FICA and Federal Taxes, only the wage costs and state taxes are eligible for forgiveness. So, the payroll tax piece charges will need to be split to PPP expense and payroll taxes. This is something that can be done through accessing your payroll company’s records to get the actual amounts and then splitting the payments when they come into your accounting software.


  1. What do I do if all money is not going to forgiven / how can I get more forgiven?  I would start out by looking at other forgivable expenses if they are only 25% such as rent and utilities or hiring employees to get back to your previous levels.  Beyond that it is tricky and I would consider reaching out to us or your current CPA.  A key component is having good accounting so you can track how things are going over the 8 week eligible period. 
  2. Is the EIDL Advance/Grant only forgiven if I do not get the EIDL loan?   No, the EIDL Advance/Grant does not need to be paid back so long as the taxpayer uses the funds for qualified purposes. The EIDL loan is a bonafide loan, with collateral, personal guarantee and the whole underwriting process.
  3. Also, do clients have to apply for forgiveness for the EIDL Advance/Grant?  The guidance is not clear on how to the EIDL Advance/Grant money is forgiven.  As soon as we know more we will update this.
  4. More FAQs from treasure department

Other things –

  1. If you deposited PPP funds into an other bank account you will have to change your payroll account and other things and will ultimately end up on PL as stated above

Common Mistakes:

  1. Not tracking expenditures per Program money received
  2. Double counting expenses on multiple program accounts
  3. Not keeping correct expenses exclusively for EIDL Advance/Grant or PPP
  4. Including Federal Taxes as PPP forgivable expenses

The SBA recently published the PPP forgiveness application.  The forms and instructions for borrowers on how to apply for forgiveness for their PPP Loans can be found here.     

We will be writing another post on this within the next week so stay tuned!

As we continue to learn more we will pass it along but in the meantime, if you need help or have questions, Finance Pals would love to give you some free tips and advice over a 30 minute phone call. We love all things Finance, whether it’s bookkeeping, accounting, FP&A, fractional CFO responsibilities or taxes and want to share our knowledge with you!

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