The spirit of the PPP loan program is to keep employees on payroll by helping businesses cover certain payroll and benefit expenses. In addition, certain non-payroll expenses are eligible to help keep your business moving forward. Therefore, at least 60% of loan funds must have been used to cover payroll expenses, with no more than 40% used on non-payroll costs. Expenses include:
Payroll expenses (at least 60%): Salaries, wages, tips or commissions (max. $100,000 per employee gross earnings), employee benefits (i.e. vacation/sick pay, healthcare/retirement benefits, life/vision/disability/dental insurance, state and local taxes).
Non-payroll expenses (no more than 40%): Mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
You can find addition details about PPP loan forgiveness on the SBA's website.