©2023 OnPay, Inc.
Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Please note that a new round of PPP loans and additional small business relief rolled out in January 2021. See all the details here.
If you've received Paycheck Protection Program (PPP) funding through the Small Business Administration (or are thinking about applying), you probably have questions about how the loan forgiveness part of the program works. While you’ll need to perform a payroll and expense audit to determine exactly how much of your loan is likely to be forgiven, our PPP loan forgiveness calculator can help give you a good estimation of what to expect.
Please note that the Consolidated Appropriations Act, 2021, passed on December 27, 2020 extends the “Covered Period” — the timeframe used to calculate employers’ payroll expenses for forgiveness — to up to 24 weeks from the date of the loan’s origination. For first draw loans from 2020, the December 31, 2020 deadline no longer applies.
Please enter the dollar amount of the PPP loan you received. If you did not receive a loan yet or want to learn more about the PPP loan program, check out our detailed PPP resources.
To ensure you maintain your employee count during the course of your PPP loan, the forgiveness application asks borrowers to provide your FTE count from a period before the loan (the “defined comparison period”). You may choose one of the following periods:
February 15 to June 30, 2019.
January 1 to February 29, 2020.
Or, if your business is a seasonal springtime business, you should use the range from February 15 to June 30, 2019.
Any full-time, salaried employee counts as one FTE, as does any hourly employee who works 40 or more hours per week. For part-time employees, divide their average weekly hours by 40 and round to the nearest tenth. For example, an employee who works 15 hours per week would count as 0.25 of an FTE (after you divide 15 by 40 and round up the result).
For the purposes of determining total payroll expenses, please enter all the payroll-related expenses you incurred during the Covered Period following the loan. Payroll expenses may include:
Salaries, wages, commissions or similar
Cash tips or the equivalent
Payment for leave
Payments for group health care benefits, including group health care coverage
Payment of retirement benefits
Payment of state and local taxes assessed on the compensation of employees
The Covered Period for payroll expenses may include up to 24 weeks (168 days) immediately following the issuance of the loan.
Please enter the combined amount of rents, mortgage interest, utility costs, and/or other qualified expenses your business incurred over up to 24 weeks following the disbursement of your PPP loan. Please use the date the loan was received as the start date for this period. To be eligible for forgiveness, any rents, mortgage interest or utilities must also have been in place prior to 2/15/2020.
Other qualified expenses include:
Human resources and accounting needs
Property damage costs due to public disturbances that occurred during 2020 and are not covered by insurance
Supplier costs (related to purchase orders or contracts that were in place prior to taking out the loan and essential to business operations)
Worker protection expenditures (like for PPE or facilities improvements made to enhance worker safety)
To ensure you maintain your employee count during the course of your PPP loan, the forgiveness application asks borrowers to provide your FTE count for the Covered Period following loan disbursement.
Any full time, salaried employee counts as one FTE, as does any hourly employee who works 40 or more hours per week. For part-time employees, divide their average weekly hours by 40 and round to the nearest tenth. For example, an employee who works 15 hours per week would count as 0.25 of an FTE (after you divide 15 by 40 and round up the result).
Please note that exceptions may be made if an employee refuses to return to work, you are unable to find the right employee to replace someone who left, or if you’re unable to resume business due to COVID-related requirements.
To have your loan completely forgiven, wages for individual employees may not decrease by more than 25%. You can find detailed instructions for this calculation on page 7 of the Loan Forgiveness Application. Here’s how it works:
Exclude any employees who received wages over $100,000 at an annualized rate.
Using payroll expenses from the first quarter of 2020 (January 1 to March 31, 2020), calculate the annualized salary for each employee.
Using payroll expenses the 24-week Covered Period following the date of disbursement of your PPP loan, calculate the annualized salary for each employee.
January 1 to March 31, 2020, calculate the annualized salary for each employee.
For each employee, divide the annualized salary from the first quarter by the annualized salary from the Covered Period. Remember that the covered period may be up to 24 weeks, but an employer may use a shorter period.
When the result is 0.74 or less, it means an employee experienced a wage decrease of more than 25%. For each of those employees, calculate how much their wage decrease exceeds 25% by multiplying their first quarter wages by 0.75, then subtracting the amount of annualized wages they received during the Covered Period.
Add up those numbers to get the total amount of wage decrease that exceeds 25%.
For example, if an employee earned $20,000 in the first quarter, their annualized wage would be $80,000 (which is $20,000 times 4 quarters). If they received $24,000 over the 24-week Covered Period, their annualized salary would be $52,000 (which is $24,000 divided by 24 weeks times 52 weeks).
Dividing the salary from the Covered Period by the salary from the first quarter results in .65, which means they have lost more than 25% of their wages. If they received 75% of their wages, they would have received $60,000 (which is $80,000 times 0.75). So the amount of the decrease that exceeded 25% is $60,000 minus $52,000: $8,000.
We estimate this amount will be forgiven:
And it looks like you’ll still owe this much:
Please note that this calculation is for estimation purposes only, and we cannot guarantee its accuracy. These numbers are based on the forgiveness formulas created by the SBA and IRS, in addition to the information you shared with us, but you should speak to your lender or a tax professional to get a loan forgiveness estimation you can rely upon for financial decision making.
These calculations are based on the information you provide and are for informational purposes only. The calculations are based on government guidance that is subject to change. As additional guidance from the SBA is released, this page will be updated.
To learn more about the PPP and how it works, check out our more detailed articles:
And if you want to apply for loan forgiveness, please fill out the SBA’s loan forgiveness application and file it with your lender.
This article is for informational purposes only and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors for formal consultation.
Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.