The Occupational Safety and Health Administration (OSHA) requires that employers protect their workers from hazardous work environments and ensure workplace safety, which includes providing personal protective equipment (also known as PPE).
While PPE has always been required in certain industries (for example, health care or construction), the coronavirus pandemic has dramatically increased the number of businesses that need to provide personal protective equipment to their employees. As the US moves forward with reopening plans, restaurants, retailers, and small businesses of all types will need to provide adequate PPE to keep their staff and customers safe.
Originally, PPE was not considered an eligible expense under the Paycheck Protection Program, so business owners who secured PPP loans were unable to use those funds to purchase personal protective equipment for their staff. PPE was also ineligible as a business tax write off—meaning business owners were having to pay for staff PPE out of pocket.
But with the recently passed Paycheck Protection Program Flexibility Act (PPPFA), PPE has joined the list of eligible non-payroll expenses, which allows business owners to allocate PPP funds to cover the cost of PPE for their employees.
This new legislation is a big win for small businesses. But like any new regulations, there are still some question marks as to how to pay for and track PPE costs in a way that maintains compliance with the PPPFA and qualifies the expenses for loan forgiveness.
What is considered PPE?
According to OSHA standards, PPE is “equipment worn to minimize exposure to a variety of hazards.” As an employer, you are required to perform a hazard assessment of your workplace, identify any potential hazards, and provide your employees with equipment that will give them personal protection from those hazards—and then train them on the proper use of PPE.
There is a variety of protection equipment that; depending on the worksite, job site, or work environment; could be considered PPE, including:
- Eye protection equipment (for example, safety glasses, goggles, or prescription safety eyewear)
- Hearing protection equipment (for example, ear plugs)
- Face protection equipment (for example, face shields)
- Respiratory protection (for example, surgical or N95 masks)
- Gloves
- Foot protection (for example, metatarsal foot protection)
- Head protection (for example, hard hats)
- Partitions (for example, a clear partition to separate customers and workers at a retail cash register)
While your required PPE will depend on the needs of your general industry (for example, dental offices, dental practices, or health care facilities will require different PPE to protect their employees from a retail store, restaurant, or construction company), right now, PPE selection for all businesses revolves around securing the PPE necessary to protect their employees from COVID-19, like masks and gloves.
How to buy PPP using PPP funds
Now that you understand what’s considered personal protective equipment, let’s jump into how to buy PPE using PPP funds.
If you want your PPE purchases to be forgivable under the Paycheck Protection Program Flexibility Act, it’s imperative to keep clear records. While it remains unclear if personal protective equipment will qualify as a tax deductible business expense, business owners should track all PPE expenses as such (as part of Section 2, line 22, of the Schedule C Profit or Loss from Business IRS form).
So how, exactly, do you do that?
- Save receipts. Any time you make a PPE purchase for your company, save the receipt. Get an itemized receipt if possible—and if the receipt is not itemized, make sure to mark which personal protective equipment (and in what quantity) was purchased.
- Keep a ledger of all PPE expenses. It’s important to keep meticulous records of your PPE purchases. Create a ledger that clearly outlines the date of the PPE purchase, what was purchased, the quantity of PPE items, the reason for purchase, and the PPE fee. Then, any time you have to purchase additional PPE, add another line to your ledger. When you apply for PPE loan forgiveness, having detailed records of your PPE purchases will, if necessary, make it easier for the SBA to verify your compliance—and make it easier to get your full loan amount forgiven.
- Keep your records organized. Building on the last point, the more organized you are in your record keeping, the easier it will be to qualify for PPP loan forgiveness. Make sure you’re keeping your receipts, records, and PPE purchases as organized as possible.
- Maintain your records. Under the PPPFA, businesses are required to maintain their records for six years. In order to be in compliance, make sure to maintain your receipts, expense ledger, and records for the full six-year period.
Using PPP funds to pay for PPP expenses is a win-win for your business, your employees, and your customers
Protecting your employees (and your customers) is always important—but it’s particularly important now, as we continue to navigate COVID-19 and its implications on the way we interact and do business. While paying for the personal protective equipment necessary to provide that protection was falling on the shoulders of business owners, the Paycheck Protection Program Flexibility Act has now given the green light to business owners to start allocating PPP funds for PPE purchases—which is a major win for your business, your employees, and your customers alike.
And now that you understand how to use your Paycheck Protection Program loan to purchase personal protective equipment for your team and your business, you’re armed with the information necessary to buy PPE in a way that not only secures the equipment you need, but also ensures those purchases qualify for loan forgiveness.
