Best Practice: How to Record the Payroll Protection (PPP) Loan

Many clients have been asking us how to record their PPP loan once it is received. The correct answer is to record the deposit as a separate loan on the Balance Sheet. Only after the loan is forgiven should it be written off. When writing off the loan the corresponding account should be an income account called Loan Forgiveness. This will separate this income from all other business income you have for the year.