Next Steps if Your Nonprofit Organization Has Received PPP Funding
So, your organization has received funding from the CARES Act Paycheck Protection Program? But, what should you be doing now to plan for the future?
Here are some items for your organization to be thinking through, not only for compliance with the PPP, but also to ensure the sustainability of cash flow over the coming uncertain months.
Carefully track the eligible payroll expenses following the eight-week period
Currently, the AICPA is still making recommendations for when the eight-week period will begin. Some options being, the start of a pay cycle, the date the loan was received, or when the stay-at-home orders are lifted. Updates are continually being made around this fluid situation on the Treasury’s website.
Regardless of when the eight-week period beings, one thing is for certain and that is the tracking of expenses. In order to be eligible for the forgiveness, we must track the payroll-related expenses that were paid using the PPP funding.
Be prepared to show all documentation at the end of the eight weeks
- Payroll tax reports (941)
- Payroll registers
- Retirement plans
- Group healthcare invoices
You should also keep on hand the invoices for all other eligible expenses incurred that fall into the 25% category (mortgage interest, lease payments, utilities). Keep everything!
Now is the time to look ahead to ensure after the eight weeks are up, your cash flow will be healthy enough to continue operations
It is better to be more accurate now than to go off an inaccurate projection. Update this on a weekly basis as things change. For more on projections, see our article, Protecting Your Organization’s Cash During Uncertain Times.
Create additional forecasting using “what if” scenarios in case the pandemic continues, and funding is still slow
As your nonprofit accounting partner, we are dedicated to keeping up with the latest information. When more clarity becomes available around the forgiveness of the PPP, we will be sure to relay the information. As always, we are here to support you as financial managers.
Please reach out to us if you have any questions.