Skip to content

California Accountant for PPP and EIDL Loan Bookkeeping + Tracking

PPP and EIDL are extremely helpful for California small businesses, but keeping track of these funds is a headache. Call our CPAs, for help.

Small businesses in California in need of financial assistance can use the Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) to cover necessary operating costs. These can be profoundly helpful to small businesses, but it’s essential to keep up-to-date bookkeeping and tracking of funds. Small business owners who would like help with the bookkeeping and tracking of their PPP loans and EIDL loans are encouraged to get in touch with a bookkeeping and tracking accountant as soon as possible.

The California PPP loan and EIDL loan bookkeeping and tracking accountants from Cook CPA Group are available to help small businesses throughout the state with loan management.

EIDL Loans for Small Businesses

EIDL loans can be beneficial to businesses that are suffering from economic hardship due to COVID-19. EIDL loans are intended to help businesses that face challenges as a result of natural disasters such as tornadoes and hurricanes. Still, they can be used to help businesses facing challenges as a result of a pandemic as well.

These loans allow small businesses (defined as a business that has no more than 500 employees) to borrow up to $2 million to be used for necessary operating costs. EIDL loans offer an advance of up to $10,000 that does not need to be repaid. (The amount included in the loan advance is $1,000 for each employee up to 10 employees.) Small businesses can qualify for EIDL loans if they: are under the limit of employees that meets the definition of a small business, are independently owned and operated, operate primarily within the United States, and are not dominant in their field on a national basis.

An interest rate of 3.75% is applied to EIDL loans, with a repayment term of up to 30 years. Repayment can be deferred up to one year after the loan is issued. The funds that small businesses receive through EIDL loans must be used for necessary expenses, which includes employee payroll, materials and supplies needed for operation, and rent and mortgage payments. Funds from EIDL loans may not be used to pay for employee bonuses, building expansions, or physical repairs.

How PPP Loans Can Help Small Businesses

PPP loans were introduced as part of the CARES Act of 2020. They’re specifically intended to provide financial assistance to businesses suffering from economic challenges as a result of COVID-19.

A business must be considered a small business (less than 500 employees) and must be negatively impacted as a direct result of COVID-19 to qualify for a PPP loan. The funds obtained through these loans can only be used for specific purposes. These funds can be used only to pay for employee payroll (salaries, wages, tips, and commissions) and employee benefits (vacation, sick leave, parental leave, family leave, insurance premiums, retirement benefits, and severance allowances). A small percentage of loan funds can be used to cover rent, utilities, and mortgage payments. Sole proprietors and independent contractors can use PPP loans for their own payroll costs but are capped at $100,000 on an annualized basis.

Note that businesses can use both PPP loans and EIDL loans if they apply and qualify. However, each loan must be used for separate costs. For example, both PPP and EIDL loan funds cannot be used for employee payroll. Using both loans to pay for the same expense or misusing funds can result in consequences such as denial of loan forgiveness, audits, and even criminal charges.

PPP and EIDL Loans Bookkeeping and Tracking

To avoid audits and other consequences, you must maintain up-to-date bookkeeping and tracking of funds received through PPP loans and EIDL loans. Bookkeeping is essential for applying for both of these loans. To apply for an EIDL loan, you’ll have to provide information regarding your company’s gross revenue during the last 12 months. If you haven’t kept up-to-date bookkeeping of your revenue, an accountant can help you do so retroactively. Applying for a PPP loan requires submission of payroll records, among other documents, which an accountant can help you gather and organize.

If you qualify for these loans, you’ll have to show that you’re spending them in the right way. Use the help of an accountant to open checking accounts that can be used solely for the expenses paid for with these funds and to keep track of your loan funds expenses. Keeping track of how these loans are spent is vital if you plan to qualify for loan forgiveness through a PPP loan — failing to show that you spent the funds from your PPP loan and EIDL loan properly can result in audits. If it’s apparent that you applied for loans even if your business didn’t need it or that you misspent the funds, legal consequences and financial complications can ensue. Avoid the risk of audits and other complications by using the help of an experienced accountant to make sure all of your bookkeeping and tracking is accurate and up-to-date.

California Accountant for Bookkeeping PPP and EIDL Loans

If your small business needs financial assistance, using a PPP loan or EIDL loan might be a good option for you. Just make sure that you keep up-to-date bookkeeping and thorough tracking of your spending, which you can do with the help of an experienced accountant from the Roseville CPA firm Cook CPA Group.