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 is 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 (edit: later amended to 65%). If the receiver of the loan follows the rules of the PPP loan, the loan can eventually be forgiven 100%.
For many businesses, employees come and go quite often (turnover). This is the nature of a free market economy. Many of the companies receiving the PPP naturally had a lot of questions when it came to how they could spend the PPP money. For instance, a business owner may want to know if the workforce has to be comprised of the same exact individuals throughout the period of time when funds are being used. The answer is No. As long as the money goes to employees of any kind, the money can be forgiven. This means you can hire new employees to replace ones which have departed with no problem.
And according to a Forbes article published four days ago, you can spend the money on other services which 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.” It should be noted that a major caveat is at the tail end of that quoted answer. It basically states that a company or business owner 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.
