Using PPP Money to Hire a Web Developer
- May 15, 2020
- Bradley Taylor
The PPP (Payroll Protection Program) was created to keep money flowing to small businesses and their employees while the economy was shut down due to the Corona Virus. One of the rules of the PPP is that the person or company receiving it must spend at least 75% of the money on payroll. Following the rules of the PPP allow the loan to be fully forgiven at the end of a two month period.
For many industries and companies, employees come and they go. This is the nature of a free market economy. Many of these companies naturally had a lot of questions when it came to how they had to spend the money. For instance, ‘did they have to be the same exact employees?’. The answer is No. As long as the money went to employees of any kind, the money can be forgiven. This means you can hire new employees to replace the old ones with no problem.
And according to a Forbes article published four days ago, you can spend the money on other services that enhance your business such as web design or web development. In the article, question #5 reads: “Do I need to hire the same position or keep employees in the same jobs?”
The answer from the article is as follows: “No. Again, your lender will be looking at the amount you spent on payroll, not who fills what job. This is a good way to make use of the funds in a positive way. For example, instead of rehiring that sales rep, you could hire a web developer to revamp your website. Or you could shift roles and responsibilities of existing employees to meet the needs of your changing business model. Just note that the position must be a full-time employee and not a contractor in order to count towards forgiveness.”
The caveat is at the end of the answer however. You must hire the employee on as full-time staff to do the website work.
But if you received the EIDL grant or loan, you can put that money to work however you want, including hiring a freelance or independent web developer.