Sage can give you the most advanced and latest tools. Paycheck protection program loans are a much-needed lifeline for small businesses. The loans can be for 2.5-time payroll costs, up to $10 million, and feature an enriched and streamlined application process and fewer requirements. In today’s article, we are going to talk about setting up the paycheck protection program loan account, preparing for the paycheck protection program, and applying for a paycheck protection program loan in Sage 50.
Information about Paycheck Protection Program Loan
The Paycheck Protection Program (PPP) is a loan intended to provide small businesses with a direct incentive to keep their employees on the payroll. SBA can repay loans if all workers are placed on the payroll for eight weeks and the money is used for salaries, rent, mortgage interest, or utilities.
You can apply through any current SBA 7(a) lender or any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Once accepted and enrolled in the system, other limited lenders would be eligible to make such loans. You can contact your nearest lender to see if they are involved in the program.
To record and track from care acts H.R. 748 Payroll Protection Program in Sage 50, you need to first set up your loan account, and loan vendor, record receipt of the loan, and record loan expenses. After this, you can easily track and manage this activity from your Sage account.
Where you can use PPP Loans
Once the PPP Loan is with you, it can be used for below :
- Payroll costs, including benefits
- Interest on mortgage obligations, incurred before 15 February 2020
- Rent under a lease agreement in force before 15 February 2020
- Utilities for which services start before 15 February 2020
How to Set up and Applied for a Paycheck Protection Program Loan in Sage 50
It is always recommended to create a separate cash account, both in Sage 50 and at the bank, to deposit the loan proceeds and track the related COVID-19 expenditures. A separate account is more audit-friendly and creates a clear audit trail. This will help in maximum loan forgiveness. Just follow the mentioned processes that help you to easily apply for and set up the paycheck protection program loan in Sage 50.
Set up the Paycheck Protection Program Loan Account
Step 1: Create a New Account for Tracking the Loan
- Open a bank account and deposit the loan amount.
- After that set up the cash account in sage 50.
- Create a new liability account, it should be tracked as a liability until you know how much the loan will be forgiven.
Step 2: Set up the Loan Vendor
- Set up the PPP lending institution as a new vendor and enter the loan liability account as the default expense account.
Step 3: Record Receipts of the Loan Proceeds
- After receiving the money, submit it to your new bank account and record the transaction in Sage 50 using the receive money window.
Applied for a Paycheck Protection Program Loan
PPP loans are considered a direct incentive for small organizations to keep their employees on the payroll without any interruption.
Who is allowed to Use the PPP loan amount?
When you receive the funds you can use them for the following:
- Payroll expenditures along with benefits
- Services adequacy started previously on 15 February 2020
- Interest on mortgage agreements, induced before 15 February 2020
- Rent under a lease contract incurred before 15 February 2020.
Requirements to apply for PPP loans
To apply for the payroll protection loans you need to satisfy certain conditions that are given below:
Small organization:
- Payroll expenditure confirmation files
- Payroll report summary with accurate bank statements
- The organization with up to 20 % stake and its relevant documents
Individual:
- Form 1099-MISC
- Residence proof certificate
- Utility & bank invoices
- IRS forms 940 & 941
Key steps that need to apply for a Paycheck Protection Program (PPP) Loan in Sage 50
It is suggested to create an independent cash account for the PPP loans in Sage 50 and at financial institutions like a bank. This helps to deposit the loan funds, track the complete COVID-19 expenditures, and maximize loan forgiveness.
Create a new account to monitor loans:
Below are the steps:
- Navigate Maintain and then choose Charts of Accounts
- Fill an updated new number in the field named Account ID
- The account should be liable
- Follow existing liability accounts to select a new number matching the type
- If the loan is for more than 12 months it is termed long-term liability else it is a current liability.
- Fill in the details including the account ID, description and select the account type
- When the account is established, you are required to set up the balance of the account.
- Avoid using the account beginning balances option
- After this, you are required to post a transaction to track the loan
After following the above-written procedure deposit the loan amount and create the cash account in sage 50. The liability account is used to track the status of the funds that need to be forgiven.
Set up a vendor account:
This includes creating a PPP lending account and the account set up as a default expense account
Below-mentioned is the list of steps:
- Create a vendor account to record the transaction
- Enter payment and embed the entire amount to interest Expense
- Fill in a reference number to create the electronic payment
- You are required to integrate some portion of the payment for an interest expense and liability account
- The bank permits the amortization table to display the breakdown of each transaction
- The amortized table makes a transaction simple
- You need to memorize GL accounts that filled in the amounts.
Create nominal ledger accounts:
Follow the steps:
- Go to Settings and then click on the Financial Settings option Hit on Chart of Accounts
- Select New Ledger Account and fill in the following fields:
- Lender name
- Display Name
- Nominal code
- Category and Category Group
- Visibility
- VAT Rate
- Select Save and then choose New Ledger Account and fill in the information like Category, overheads range, code, display name, account, etc.
Record Receipts of the loan proceeds:
Whenever you receive the loan funds, the next step is to submit it into a bank account and then record the transaction in Sage 50 through receiving a money dialog window.
Follow the below points:
- Discover banking then hit the preferred bank account and then select New Entry
- Locate the Sale/receipt listed in a drop-down button
- Choose another receipts option and fill in the information including the date received, details, the amount received, and reference
- Write the loan information which includes loans etc.
- Hit on Save.
Now you have recorded receipt of the loan
Make sure you collect accurate information and create an individual account and liability account. Embed this detail in Sage 50 through the journal window.
Input a loan in Sage 50:
- Discover the General Journal window
- Click on the liability account
- Hit on post
- Locate the payment journal and hit Make other payment
- Choose Vendor
- Pick the bank loan liability located below the Account column
- Click on an interest expense account
- Fill in the interest amount and click ok.
For more information, Sage 50 experts are available 24*7 to consultant you with the latest information and help you to solve your paycheck protection program loan in Sage 50 queries. Sage experts are professional, polite, and have many years of experience in the same domain.
