SBA PPP Loan Forgiveness – Best Practice

Consider opening a separate bank account to substantiate PPP Loan Forgiveness.

Now, applicants are beginning to receive loan proceeds under the CARES Act Paycheck Protection Program (PPP). In order to preserve loan forgiveness, borrowers must prove how they spent the loan proceeds.

While it does not appear to be mentioned in the CARES Act or related guidance available as of April 10, 2020, PKF O’Connor Davies is advising clients to consider opening a separate DDA (demand deposit or checking account) to deposit and disburse the PPP Loan proceeds. Or, borrowers can transfer the loan proceeds into a separate existing account upon receipt.

If a separate account is opened, borrowers should make any and all qualifying expenditures – including payroll, employee benefits, rent, interest on indebtedness and utilities – from the separate account. Again, while we do not believe this is required by the Act, this best practice is designed to minimize questions and challenges regarding the use of the loan funds and help you achieve the maximum loan forgiveness.

For more information, visit the PKF O’Connor Davies COVID-19 Resource Center, or email: