McKINNEY, TX -- The Paycheck Protection Program (PPP), created by the CARES Act, is one of the most popular loans out there for small businesses in the wake of the government-forced shutdown due to COVID-19. One of the aspects that’s most appealing to these businesses is the fact that the PPP loan can be turned into a grant. In order for that to happen, however, businesses need to follow rules laid out in the government legislation that are often complicated and counterintuitive.

So how can you and/or your business maximize the amount of the loan that’s turned into a grant? Here are the top three tips you should follow to do exactly that:


1. Calculate all the expenses that qualify for loan forgiveness based on the borrower’s expenditures during the 24 weeks after the loan is made. According to the U.S. Chamber of Commerce, those include:

  • Payroll expenses
  • Certain non-payroll expenses:
    • Mortgage interest payments
    • Renter lease payments
    • Utility payments


Part of calculating all of the expenses also includes figuring out when your 24-week period begins. According to Neil Bradley, the executive vice president and chief policy officer with the U.S. Chamber of Commerce, there are two ways to figure this out.


“Your 24 weeks began on the day your PPP loan was disbursed to you,” says Bradley. “Now, if you happen to be a business that happens to pay your employees biweekly or even more frequently, you do have another option. You can start your 24-week period on the first day of the first pay period that begins after that date in which you received the proceeds of your loan into your bank account.”  



2. Tip two is a two-part tip. One, don’t reduce salaries or wages by more than 25% during the 24-week period. Two, don’t reduce the amount of full-time employees (as a percentage) you have employed during your 24-week period. If you do either of those, the amount of the loan that is forgiven will also be reduced.

Bradley says there are two exceptions for when you won’t be penalized for reducing the amount of full-time employees on your staff.

“If you made a good-faith, written offer to rehire an employee during that eight-week period and it was rejected by the employee, you won’t be penalized,” explains Bradley. “Similarly, if an employee was fired for cause, voluntarily resigned, or requested a reduction in hours, you also won’t be penalized.”


3. Make sure 60% of loan spending is used for payroll expenses.


If you follow those three tips your loan forgiveness will equal that of the PPP loan – and therefore turn into a grant for your company.

There have also been a few updates throughout this process. For example, if you received your loan before June 5, the 24-week period was only an eight-week period.