Guide to the Paycheck Protection Program (PPP)

Learn about the PPP, how you should prepare for the Loan Forgiveness phase, and what reports you will need from ADP.

The Paycheck Protection Program (PPP) offers forgivable low-interest loans to small businesses facing uncertainty due to COVID-19, so businesses can retain workers, maintain payroll, and cover other existing overhead costs.

How to Apply

On December 27, the President signed the Consolidated Appropriations Act, 2021 (CAA 2021) which, among other things, reopens the Paycheck Protection Program and permits previous borrowers to apply for a second PPP loan. Below is information to help you determine if you qualify for a new PPP loan and how to apply.

Who can apply?
  • For first-time borrowers, businesses must have 500 or fewer employees. Borrowers applying for a second PPP loan must have 300 or fewer employees. These thresholds apply to nonprofits, veterans' organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors.
  • Please note that certain businesses over the respective employee limit, including franchises and NAICS 72 businesses (Accommodation and Food Services), may still qualify.
  • All borrowers applying for a PPP loan need to meet the SBA’s certification of need requirement, attesting that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
  • Businesses using a Professional Employer Organization (PEO), or transitioning to a PEO, that meet the eligibility criteria for a loan can apply. (See SBA FAQ #10 for more information)
When can I apply?
  • The availability of PPP loans was recently extended to May 31, 2021, or until allocated funds are exhausted. Check with your lender to determine if they require applications to be submitted prior to the May 31 deadline. Businesses are advised to file as soon as possible. Once the allocated funds are disbursed, no new loans will be issued.
Where can I apply?
  • Check with your lender, but you can apply through any existing SBA lender or through any federally-insured depository institution including a federally-insured credit union, or Farm Credit System institution that is participating. Other regulated lenders will be available to provide these loans once they are approved and enrolled in the program. Visit SBA's website for a list of eligible lenders.
What do I need to apply?
  • You will need to complete the PPP loan application, which your lender will provide, and submit the application with your payroll documentation. If you are applying for a second PPP loan, remember to run new PPP loan application reports from your ADP system. The ADP reports are updated frequently to reflect the latest government guidance. You should always run the applicable PPP report as close in time to submitting your PPP loan application as possible. For your reference, click here for application form provided by the SBA.
What is the maximum amount my PPP loan can be?
  • Loans are limited to $10 million or less. (Borrowers applying for a second PPP loan are limited to $2 million or less.)
Are there special rules for businesses applying for a second PPP loan?
  • Yes, in addition to having 300 or fewer employees and loans being limited to $2 million or less, businesses applying for a second PPP loan will need to demonstrate at least a 25 percent reduction in revenue between corresponding quarters in 2019 and 2020. The borrower may select the relevant quarter for comparison. Special rules apply to borrowers that were not in business for all or part of 2019. In addition, the borrower must have spent all of the proceeds from the first PPP loan before funds from the second draw are disbursed.
What other documents will I need to include in my application?
  • Check your lender’s requirements, but we expect, at a minimum, you will need to provide your lender with payroll documentation (see the PPP Application Reports section below).

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PPP Application Reports

As your payroll and HR partner, ADP can help you gather information to understand the payroll specific components of your PPP loan. These reports are easily accessed within your ADP system and are updated regularly as government guidance changes.

Please select your ADP product below:

RUN Powered by ADP®

What Reports Do I Need?
  • To help understand the maximum loan amount you were able to request when applying, use the CARES SBA-PPP: Monthly Payroll Cost Report. Your maximum loan amount was based on certain monthly payroll costs based on an average monthly total over the applicable period.
  • If your company uses ADP for tax filing, Form 940: Employer's Annual Federal Unemployment Tax Return and Form 941: Employer's Quarterly Federal Tax Return are available in RUN Powered by ADP. Your lender may require these Forms with your PPP loan application.
  • The CARES Loan Report Package contains a pre-packaged set of reports that your lender may require with your PPP loan application, including:
    • CARES SBA-PPP: Monthly Payroll Cost Report
    • CARES SBA-PPP: Monthly Payroll Cost Details
    • Form 940: Employer's Annual Federal Unemployment Tax Return
    • Form 941: Employer's Quarterly Federal Tax Return
  • If your company uses ADP for retirement services, to help determine the maximum loan amount your company can request, ADP Retirement Services has generated the Employer Contributions Report that details Employer paid 401(k) contributions posted to the recordkeeping system for check dates within the corresponding year and month. Included in the report are all contributions to your 401(k) retirement plan held at ADP, including employer paid Matching and Non-Elective contributions.
Where Do I Find the Reports?
CARES SBA-PPP: Monthly Payroll Cost Report
CARES Loan Report Package
Forms 940 & 941
  • These Forms can be found in the CARES Loan Report Package described above.

or

Employer Contributions Report
  • Log into the Plan Sponsor Website.
  • Select REPORTS from the left-hand navigation menu
  • Scroll down to PLAN SUMMARY and select Employer Contributions Report to download.
Need More Information on the Report?
  • Click here for a brief explanation of how payroll costs are calculated in this report.
  • Click here for Frequently Asked Questions, including greater detail about how the report is calculated.

ADP Workforce Now® and ADP® Comprehensive Services

What Reports Do I Need?
  • To help understand the maximum loan amount you were able to request when applying, use the 2020 CARES SBA-PPP: Monthly Payroll Cost Report. Your maximum loan amount was based on certain monthly payroll costs based on an average monthly total over the applicable period.
  • If your company uses ADP for tax filing, Form 940: Employer's Annual Federal Unemployment Tax Return and Form 941: Employer's Quarterly Federal Tax Return are available from ADP. Your lender may require these Forms with your PPP loan application.
  • If your company uses ADP for retirement services, to help determine the maximum loan amount your company can request, ADP Retirement Services has generated the Employer Contributions Report that details Employer paid 401(k) contributions posted to the recordkeeping system for check dates within the corresponding year and month. Included in the report are all contributions to your 401(k) retirement plan held at ADP, including employer paid Matching and Non-Elective contributions.
Where Do I Find the Reports?
2020 CARES SBA-PPP: Headcount
2020 CARES SBA-PPP: Monthly Payroll Cost
Forms 940 & 941
  • Login here.
  • In the navigation menu, go to Reports > Tax & Banking > Company Tax Documents.
Employer Contributions Report
  • Log into the Plan Sponsor Website.
  • Select REPORTS from the left-hand navigation menu.
  • Scroll down to PLAN SUMMARY and select Employer Contributions Report to download.
Need More Information on the Reports?
  • Click here for a brief explanation of how payroll costs are calculated in this report.
  • Click here for Frequently Asked Questions, including greater detail about how the reports are calculated.
  • Watch this video to see where to find the PPP reports in ADP Workforce Now and how to run them.

ADP TotalSource®

What Reports Do I Need?
  • To help understand the maximum loan amount you were able to request when applying, use the 2020 CARES SBA-PPP: Monthly Payroll Cost Report. Your maximum loan amount is based on certain monthly payroll costs based on an average monthly total over the applicable period.
  • Some lenders may ask for Form 940: Employer's Annual Federal Unemployment Tax Return and Form 941: Employer's Quarterly Federal Tax Return with your PPP loan application. As a Certified Professional Employer Organization, ADP TotalSource remits payment of Federal and State employment taxes, including filing Form 940 and Form 941. In lieu of these forms, ADP TotalSource has prepared a letter you can provide to your lender.
  • If your company does not participate in the ADP TotalSource Retirement Savings Plan but you have your own retirement plan that is serviced by ADP Retirement Services, to help determine the maximum loan amount your company can request, ADP Retirement Services has generated the Employer Contributions Report that details Employer paid 401(k) contributions posted to the recordkeeping system for check dates within the corresponding year and month. Included in the report are all contributions to your 401(k) retirement plan held at ADP, including employer paid Matching and Non-Elective contributions.
Where Do I Find the Reports?
2020 CARES SBA-PPP: Headcount
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Head Count or CARES SBA Paycheck Protection Program: Head Count.
  • You will receive a report similar to this sample report.
2020 CARES SBA-PPP: Monthly Payroll Cost
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named: 2020 CARES SBA-PPP: Monthly Payroll Cost or CARES SBA Paycheck Protection Program: Monthly Payroll Cost.
  • You will receive a report similar to this sample report.
Forms 940 & 941
  • TotalSource clients can find a letter for lenders regarding Forms 940 and 941 in the COVID-19 Updates menu or spotlight section on the homepage.
Employer Contributions Report
  • Log into the Plan Sponsor Website.
  • Select REPORTS from the left-hand navigation menu.
  • Scroll down to PLAN SUMMARY and select Employer Contributions Report to download.

ADP Accountant Connect®

Are there reports to help my clients?

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Loan Forgiveness Details & Reports

Up to 100 percent of the PPP loan is forgivable (to the extent that employers meet certain requirements, such as maintaining employment and wage levels). The loan will be fully forgiven if:

  • The loan proceeds are spent, or the qualifying costs incurred, within the applicable covered period following receipt of the loan;
  • The funds are used for payroll costs and the other permitted Loan Uses described below;
  • At least 60 percent of the loan amount has been used for payroll costs; and
  • Certain other conditions, such as maintaining employment and wage levels, are met.

In addition, the COVID-19 relief law passed by Congress in December 2020 provides that the forgiven portion of a PPP loan can be excluded from gross income. Borrowers have 10 months from the end of their covered period to apply for forgiveness before they would need to start paying back any portion of their loan. Lenders have 60 days to make a decision on loan forgiveness.

The new round of PPP funding includes other important changes to the PPP loan forgiveness process, some of which may apply to loans issued previously in 2020. ADP is actively evaluating these changes and will update the guidance below and in the PPP Loan Forgiveness Reports as additional guidance is issued by the Treasury Department and Small Business Administration. For example, the CAA 2021 provides that the SBA will issue a streamlined forgiveness application form for loans of $150,000 or less. This one-page form would require borrowers to certify certain information related to loan forgiveness, list the amount of the loan, number of employees retained and estimated amount of the loan spent on payroll costs. Borrowers would be required to retain – but not submit – documents substantiated their forgiveness application for 4 years for employment records and 3 years for other records.

For borrowers who are interested in applying for forgiveness now, the Treasury Department and SBA previously issued a Loan Forgiveness Application Form, an “EZ” version of the Loan Forgiveness Application, and instructions for each, all of which are available here. Additionally, borrowers who previously received loans of $50,000 or less may be exempt from reductions in loan forgiveness amounts based on reductions of full-time equivalent employees or in salaries or wages. If eligible, borrowers would use the SBA Form 3508S, or their lender’s equivalent form, to submit their loan forgiveness application. ADP has put together a Loan Forgiveness Checkup which outlines important steps to take before year-end to maximize loan forgiveness.

Loan Forgiveness FAQs

Here are some frequently asked questions about loan forgiveness. Guidance on loan forgiveness is evolving and rules may change, so check back for updates.

What are permitted uses for PPP loans?
  • Payroll costs (as described below);
  • Interest on mortgage obligations, in force before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.
  • In addition, as set forth in the CAA 2021, borrowers can also use loan proceeds on certain covered supplier costs, worker protection expenditures, property damage costs, and operations expenditures.
How will the amount of loan forgiveness be determined? Can a PPP loan be fully forgiven?

Yes, the amount of the loan can be fully forgiven as long as certain conditions are met. The specific amount will generally depend in part on what portion of the loan is used on eligible payroll costs and whether the employer has maintained staffing and pay levels during the covered period.

A loan may be fully forgiven if all the following three conditions are met:

  • The loan proceeds are spent, or qualifying costs are incurred, within the applicable covered period following receipt of the loan proceeds (unless using an Alternative Payroll Covered Period for payroll costs, described below).
  • At least 60 percent of the loan amount was used for eligible payroll costs, and no more than 40 percent was used for the other Loan Uses described above.

    Example: If a small business seeks 100% forgiveness on a loan for $50,000, at least $30,000 must be for payroll costs during the applicable covered period following disbursement of the loan. No more than $20,000 may be for the other Loan Uses described above.
  • Staffing and pay levels must be maintained during the applicable covered period immediately following disbursement of the loan (see below).
What is the period within which I must spend my loan proceeds to obtain full loan forgiveness?

To obtain full forgiveness, loan proceeds must be spent within the 8- to 24-week period immediately following disbursement of the loan. If you pay your employees on a biweekly or more frequent schedule, you may choose to begin the covered period on the first day of the first pay period following disbursement of the loan (“Alternative Payroll Covered Period”) for qualifying payroll costs only.

How will the determination of whether my business has maintained staffing levels be made?

To determine whether staffing levels have been maintained, the average number of full-time equivalent employees (FTEEs) during the applicable Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods. Borrowers may either use the period from February 15 through June 30, 2019 or January 1 through February 29, 2020. For instance, if the employer had 20 FTEEs from February 15 through June 30, 2019 and 18 FTEEs from January through February 2020, the borrower would most likely choose the latter time period since it may be more advantageous to use the lower FTEE number for the chose lookback period. If the number of FTEEs during the Covered Period or Alternative Payroll Covered Period is lower than the time period chosen, the amount of loan forgiveness may be reduced proportionately.

Seasonal employers may compare the average FTEEs employed during the Covered Period or Alternative Payroll Covered Period to either period listed above or to any consecutive twelve-week period between May 1 through September 15, 2019.

Note that your forgiveness amount will not be reduced by a failure to maintain staffing levels during the Covered Period or Alternative Payroll Covered Period if (a) your average FTEEs between February 15 and April 26, 2020 is lower than your FTEES as of February 15, 2020, and (b) you restored the level of FTEEs on or before the end of the applicable Safe Harbor period to be equal or higher to the FTEE levels as of February 15, 2020. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. There are other exceptions that may apply. See the question below discussing rehiring employees.

When calculating the amount of loan forgiveness, how will the determination of whether my business has maintained pay levels be made?

Repayment of part of the loan may be required if an employee’s average annual salary (for salaried employees) or average hourly rate (for hourly employees) are reduced by 25% or more during the applicable Covered Period or Alternative Payroll Covered Period compared to the period of January 1 though March 31, 2020 (for borrowers in the first PPP round).

However, if (a) a given employee’s wage levels (annual salary level for salaried employees and hourly wages for hourly employees) between February 15 and April 26, 2020, are lower than as of February 15 and (b) you restore the wage levels by the end of the applicable Safe Harbor period to be same or higher than as of February 15, 2020, there will be no reduction in forgiveness based on that employee’s wage levels. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020.

Note: When comparing wage levels to determine if your loan forgiveness amount will be reduced, employees who earned wages or a salary at an annualized rate of more than $100,000 in any pay period of 2019 aren’t considered.

My company previously laid off an employee, but later offered to rehire the employee. If the employee declined the rehire offer, will my PPP loan forgiveness amount still be reduced?

Loan forgiveness will not be reduced based on an inability to rehire employees if the employer can document (1) written offers to rehire individuals who were employees of the organization on February 15, 2020; or (2) an inability to hire similarly qualified employees for unfilled positions by the end of the safe harbor period.

Additionally, forgiveness will not be reduced for failure to maintain employment levels if the organization is able to document an inability to return to the same level of business activity as existed prior to February 15, 2020, due to compliance with COVID-19-related guidance for sanitation, social distancing, or worker or customer safety requirements from the Health and Human Services (HHS), the Centers for Disease Control and Prevention (CDC), or the Occupational Safety and Health Administration (OSHA).

The SBA has suggested that the documentation required above would be satisfied if an employer made a good faith, written offer of rehire at the same salary/wages and for the same number of hours, the employee rejected the offer of rehire, and the employer notified the applicable state unemployment insurance office of the employee’s rejection of rehire within 30 days. Employees who are terminated for cause, voluntarily resign, or voluntarily request and receive a reduction of hours may also be excluded from the FTEE reduction calculations.

How are "payroll costs" defined under the PPP?

Under the PPP, payroll costs generally include:

  • Employee gross pay including salary, wages, commissions, bonuses, and tips, capped at the annualized value of $100,000 for the length of the applicable Covered Period or Alternative Payroll Covered Period. For an 8-week Covered Period, this limit is $15,385, which is the 8-week value of the annualized $100,000 cap. For employers using a 24-week Covered Period, this limit is $46,154.
  • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
  • Employer-paid healthcare and group insurance benefits, including insurance premiums.
  • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

Note: The definition of payroll costs excludes employer federal taxes, workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

Do all payroll costs need to be paid within the Covered Period or Alternative Payroll Covered Period?

No. The latest guidance from the government indicates that borrows are eligible for forgiveness for payroll costs paid and payroll costs incurred, but not yet paid, during the Covered Period or Alternative Payroll Covered Period. Payroll costs are considered paid on the date of distribution of paychecks or origination of an ACH credit transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not paid within the Covered Period or Alternative Payroll Covered Period must be paid by the next regular payroll date to be counted for forgiveness purposes.

What happens if I use less than 60 percent of the PPP loan on payroll costs?

The Paycheck Protection Program Flexibility Act provides that at least 60% of the covered loan amount must be used for payroll costs. If less than 60% of the loan amount is used on payroll costs, the amount of the loan that is forgiven may be reduced. The Treasury Department has indicated that at least 60% of the loan forgiveness amount must have been used for payroll costs.

How do I apply for loan forgiveness? How long will it take?

You can apply for loan forgiveness through the lender that is servicing the loan. Lenders have 60 days to make a decision on loan forgiveness. The SBA has issued a loan forgiveness applications and instructions, which can be found here.

I used payroll cost and headcount reports for the PPP loan application. Can I use the same reports for purposes of loan forgiveness reporting?

No, the ADP payroll cost and headcount reports that were developed to support PPP loan applications cannot be used for PPP loan forgiveness purposes. ADP has reports available to support clients that are navigating the forgiveness process. See below for more information about PPP loan forgiveness reports that are available.

Does joining a PEO during the PPP loan forgiveness period adversely impact my business’s ability to apply for loan forgiveness?

No. Joining a PEO will not negatively impact loan forgiveness. A business that joins a PEO after receiving an SBA loan and before loan forgiveness will need to be able to produce payroll documentation for the period prior to the PEO relationship and payroll documentation from their PEO for the period following them joining the PEO relationship in order to support any request for loan forgiveness. (See SBA FAQ 10: A PEO client is considered an eligible borrower)

I saw that the SBA released a version of the PPP Loan Forgiveness Application called “3508S.” How do I know if I can use that form?

The Treasury Department and Small Business Administration have issued a new “3508S” version of the Loan Forgiveness Application form and Instructions, which are available here. The 3508S form significantly streamlines the loan forgiveness process for eligible borrowers.

The 3508S form is available to borrowers who obtained loans of $50,000 or less. Note, however, that borrowers that together with their affiliates received loans totaling $2 million or greater cannot use the new 3508S form. Borrowers should review 85 FR 20817 (April 15, 2020) regarding application of SBA’s affiliation rules, available here.

The 3508S form eliminates the need for borrowers to demonstrate that they maintained wage and employment levels during the applicable covered period. Instead, borrowers will need only to demonstrate that they spent the loan proceeds on covered payroll (at least 60% of the forgiveness amount) and non-payroll costs. Borrowers can download the PPP Loan Forgiveness Payroll Costs report from their ADP system to submit to their lender with the 3508S form.

Can I use the EZ Loan Forgiveness Application form that the SBA released?

For borrowers who are not eligible to use the 3508S form, the Treasury Department and Small Business Administration have also made available an “EZ” version of the Loan Forgiveness Application form and Instructions, which are available here. The EZ form contains simplified calculations and reduced reporting requirements for eligible borrowers. In order to use the EZ form, borrowers must be able to certify that at least one of three scenarios apply, as set forth on the form.

Loan Forgiveness Checklist

Guidance on loan forgiveness is evolving and rules may change, so check back for updates. Additionally, be sure to run your ADP PPP loan forgiveness reports as close in time as possible to when you submit your loan forgiveness application. If you’ve already received a PPP loan and are applying for forgiveness now, consider these steps to help maximize your forgivable amount:

During the applicable Covered Period following receipt of the loan...

  • Maintain staffing levels.
    • Ensure that the average number of full-time equivalent employees (FTEEs) during the Covered Period or Alternative Payroll Covered Period is at least equal to the average number of FTEEs during the period from February 15 through June 30, 2019, or January 1 through February 29, 2020. If the number of FTEEs is lower during the Covered Period or Alternative Payroll Covered Period than during these two time periods, the amount of loan forgiveness may be reduced proportionately.*
  • *If applicable, reverse any reductions in staffing levels by the end of the applicable Safe Harbor Period.
    • FTEE reductions occurring between February 15 and April 26, 2020 will not be considered in reducing the loan forgiveness amount if they are reversed by the end of the applicable Safe Harbor period. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. However, if the staffing reduction was made outside the February 15 to April 26 timeframe, the forgivable amount may still be reduced even if the staffing reduction is later reversed.
  • Maintain pay levels.
    • Where possible, avoid reducing any employee’s average annual salary (for salaried employees) or average hourly wages (for hourly employees) by 25% or more during the Covered Period or Alternative Payroll Covered Period compared to the period of January 1 through March 31, 2020 (for borrowers in the first PPP round). If any employee’s pay is reduced by 25% or more, repayment of a corresponding part of the loan may be required.**

      Note: When comparing wage levels to determine if your loan forgiveness amount will be reduced, employees who earned wages or a salary at an annualized rate of more than $100,000 in any pay period of 2019 aren’t considered.
  • **If applicable, reverse any reduction to an employee’s pay by the time of your forgiveness application or by the end of the applicable Safe Harbor Period.
    • If (a) a given employee’s wage levels (annual salary level for salaried employees and hourly wages for hourly employees) between February 15 and April 26, 2020, are lower than as of February 15 and (b) you restore the wage levels by the end of the applicable Safe Harbor period to be same or higher than as of February 15, 2020, there will be no reduction in forgiveness based on that employee’s wage levels. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. However, if the pay reduction was made outside the February 15 to April 26 timeframe, the forgivable amount may still be reduced even if the pay reduction is later reversed.
  • Only use the PPP loan for permitted uses:
    • Payroll costs (as described below);
    • Interest on mortgage obligations in force before February 15, 2020;
    • Rent, under lease agreements in force before February 15, 2020; and
    • Utilities, for which service began before February 15, 2020.
    • In addition, as set forth in the CAA 2021, borrowers can use loan proceeds on certain covered supplier costs, worker protection expenditures, property damage costs, and operations expenditures.
  • Spend the loan proceeds, or incur qualifying costs, within applicable Covered Period or Alternative Payroll Covered Period. To obtain full forgiveness, loan proceeds must be spent within to the 8- to 24 week period immediately following disbursement of the loan (the Covered Period). If you pay your employees on a biweekly or more frequent schedule, you may choose to begin the covered period on the first day of the first pay period following disbursement of the loan (“Alternative Payroll Covered Period”) for qualifying payroll costs only.
  • Use at least 60% on payroll costs during the Covered Period or Alternative Payroll Covered Period. Payroll costs include:
    • Employee gross pay including salary, wages, commissions, bonuses, and tips, capped at the annualized value of $100,000 for the length of the applicable Covered Period or Alternative Payroll Covered Period. For an 8-week Covered Period, this limit is $15,385, which is the 8-week value of the annualized $100,000 cap. For a 24-week Covered Period, this limit is $46,154.
    • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
    • Employer-paid healthcare and group insurance benefits, including insurance premiums.
    • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

      If less than 60 percent of loan is used on payroll costs, the amount of loan forgiveness may be reduced proportionately and may need to be repaid.

Loan Forgiveness Scenarios

Guidance on loan forgiveness is evolving and rules may change, so check back for updates.

Forgiveness Scenario

Maria's Eyecare received a PPP loan of $70,000 on April 10, 2020. The company elects to use the 8-week Covered Period length to meet the criteria* for loan forgiveness. The timeline starts as soon as the company receives the loan+.

In the 8 weeks after receiving the loan, Maria’s Eyecare didn’t reduce the number of full-time-equivalent employees (FTEE) and didn’t reduce the pay of any employee****.

Because the company met all the criteria for loan forgiveness, the entire $70,000 loan is eligible for forgiveness.

Forgiveness Rules:

Conditions:

+ To obtain full forgiveness, loan proceeds must be spent during the Covered Period or Alternative Payroll Covered Period. To obtain full forgiveness, loan proceeds must be spent within 8 to 24 weeks immediately following disbursement of the loan, whichever is earlier. If you pay your employees on a biweekly or more frequent schedule, you may choose to use the Alternative Payroll Covered Period and begin the covered period on the first day of the first pay period following disbursement of the loan for qualifying payroll costs only.

* A loan may be fully forgiven if all the following three conditions are met:

  • The loan proceeds are spent, or qualifying costs are incurred, within the applicable Covered Period or Alternative Payroll Covered Period.
  • At least 60 percent of the forgiveness amount was used for payroll costs, and no more than 40 percent was used for the other permitted Loan Uses.
  • Staffing and pay levels must be maintained during the applicable Covered Period or Alternative Payroll Covered Period ****.

Payroll Costs:

** Under the PPP, payroll costs generally include:

  • Employee gross pay, including salary, wages, commissions, bonuses, and tips, capped at the annualized value of $100,000 for the length of the applicable Covered Period or Alternative Payroll Covered Period. For an 8-week Covered Period, this limit is $15,385, which is the 8-week value of the annualized $100,000 cap. For employers using a 24-week Covered Period, this limit is $46,154.
  • All employer state and local taxes paid on employee gross pay, such as state unemployment insurance and employer-paid state disability insurance (in applicable states).
  • Employer-paid healthcare and group insurance benefits, including insurance premiums.
  • Employer-paid retirement benefits, including defined-benefit or defined-contribution retirement plans and employer 401(k) contributions.

Note: The definition of payroll costs excludes employer federal taxes, workers compensation premiums, payments to independent contractors, and payments to employees for leave covered under the Families First Coronavirus Response Act.

Permitted Loan Uses:

*** PPP loans may be used for:

  • Payroll costs;
  • Interest on mortgage obligations, in force before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.
  • In addition, as set forth in the CAA 2021, borrowers can use loan proceeds on certain covered supplier costs, worker protection expenditures, property damage costs, and operations expenditures.

Staffing and Wage Levels:

**** To determine whether adequate staffing levels have been maintained, the average number of full-time equivalent employees (FTEEs) during the Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods. Borrowers may either use the period from February 15 through June 30, 2019, or January 1 through February 29, 2020. Seasonal employers may compare the average FTEEs employed during the Covered Period or Alternative Payroll Covered Period to either period listed above or to any consecutive twelve-week period between May 1 through September 15, 2019. If the number of FTEEs during the Covered Period or Alternative Payroll Covered Period is lower than these earlier time periods, the amount of loan forgiveness may be reduced proportionately. However, the forgiveness amount will not be reduced by a failure to maintain staffing levels during the Covered Period or Alternative Payroll Covered Period if (a) the average FTEEs between February 15 and April 26, 2020 is lower than the FTEES as of February 15, 2020, and (b) the company restored the level of FTEEs by the end of the applicable Safe Harbor period, to be equal or higher to the FTEE levels as of February 15, 2020. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. If the staffing reduction was made outside the February 15 to April 26 timeframe, the forgivable amount may still be reduced even if the staffing reduction is later reversed.

Repayment of the corresponding portion of the loan may be required if an employee’s earnings are reduced by more than 25% during the Covered Period or Alternative Payroll Covered Period compared to the period of January 1 through March 31, 2020. However, if (a) a given employee’s wage levels (annual salary level for salaried employees and hourly wages for hourly employees) between February 15 and April 26, 2020, are lower than as of February 15 and (b) you restore the wage levels by the end of the applicable Safe Harbor period, if earlier, to be same or higher than as of February 15, 2020, there will be no reduction in forgiveness based on that employee’s wage levels. The Safe Harbor period ends on December 31, 2020 for borrowers who received their PPP loan prior to August 8, 2020, and on the last day of the chosen covered period for borrowers who received their PPP loan or Second Draw PPP loan in or after December 2020. If the pay reduction was made outside the February 15 to April 26 timeframe, the forgivable amount may still be reduced even if the pay reduction is later reversed.

***** PPP loan proceeds may not be used to pay FFCRA paid sick or family leave wages for which a tax credit is allowed.

Loan Forgiveness Reports

PPP Loan Forgiveness Reports Overview
  • Clients that received a Paycheck Protection Program (PPP) loan under the Coronavirus Aid Relief and Economic Security (CARES) Act may need payroll data from their ADP solution to calculate their loan forgiveness amount.
  • ADP has reports to help clients determine their Paycheck Protection Program (PPP) covered payroll costs.
RUN Powered by ADP®
What Reports do I need?
  • CARES SBA – PPP: Loan Forgiveness EZ Application – can be used to help populate your payroll data from RUN to prefill the SBA Form 3508EZ PPP Loan Forgiveness Application. The additional fields needed for completion of the application are available for editing.
  • PPP Forgiveness Report Package: This comprehensive package includes materials to help apply for loan forgiveness:
    • 941: Employer’s Quarterly Federal Tax return
    • Applicable State Unemployment Wage and Tax Returns

      As well as the CARES SBA-PPP Loan Forgiveness reports below:

    • CARES SBA-PPP: Loan Forgiveness Payroll Cost - provides the total payroll cost for all pay dates during the Covered Period. Employees are listed alphabetically in two separate groups: first are employees who did not earn more than $100,000 on an annualized basis in any single pay period in 2019 and employees who were not employed in 2019; and second are employees who earned, in at least one pay period in 2019, gross pay in excess of $100,000 on an annualized basis. For the Loan Forgiveness Application, these two groups of employees will need to be listed separately. The SBA payroll cost must be at least 60% of the total forgiveness amount.

      For information on this report, please see the video tutorial.
    • CARES SBA-PPP: Loan Forgiveness Payroll Cost Details - provides the total payroll cost for all pay dates during the Covered Period, broken out by employee. The SBA payroll cost must be at least 60% of the total forgiveness amount.
    • CARES SBA-PPP: Loan Forgiveness Employee Wage Comparison - can be used to show if there has been a reduction of wages for any employee of more than 25% between the selected Covered Period and the Lookback Period. Note that employees earning more than $100,000 on a prorated basis in any single pay period in 2019 are excluded from the wage comparison requirement. Also note that if you processed unpaid hours for any hourly employee, such as for unpaid leave, during one of the listed periods, you may need to manually adjust the employee’s calculated hourly rate.

      For information on this report, please see the video tutorial.
    • CARES SBA-PPP: Loan Forgiveness FTEE Comparison - provides Full Time Equivalent Employee values for the FTEE calculation options and can be used to show if there has been a reduction of FTEEs between the selected Covered Period and the applicable Lookback Period.

      For information on this report, please see the video tutorial.
    • CARES SBA–PPP: Loan Forgiveness Wage Reduction Safe Harbor - if you determine there has been a reduction of wages, this report is used to determine whether wages have been restored in order to restore the full loan forgiveness amount.
    • CARES SBA–PPP: Loan Forgiveness FTEE Reduction Safe Harbor - if you determine there has been a reduction of FTEEs, this report is used to determine whether FTEEs have been restored in order to restore the full loan forgiveness amount.
    • NOTE: if there are any days between the last pay date in your Covered Period and the end of your Covered Period, the Payroll Costs reports will not include the wages incurred during those days. However, the latest guidance from the government permits you to add the pay for employee wages incurred but not paid before the end of your Covered Period. For payroll paid after the end of your Covered Period that includes wages incurred during the Covered Period, we recommend running separate Payroll Cost Reports for this period and adding the proportionate share of incurred payroll costs to the totals before submitting to the SBA or your lender.
Where do I find them?
CARES SBA – PPP: Loan Forgiveness EZ Application
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness Application
  • Additional fields needed for completion of the application are available for editing
CARES SBA-PPP: Loan Forgiveness Payroll Cost
  • To generate the report first select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness Payroll Cost.
  • From the Covered Period calculation field, select either 8 weeks or 24 weeks
  • Enter the report Start date.

    Select the beginning date of the Covered Period based upon the date of first disbursement of loan proceeds or, if you pay employees weekly and/or bi-weekly, you may use an Alternative Payroll Covered Period, beginning on the first day of the first pay period following disbursement of your loan. Since PPP loans were available as of April 2020, RUN will only allow the Start date to be 4/1/2020 or later.
  • If you are applying for forgiveness prior to the end of your Covered Period, select the number of weeks in the Optional Covered Period.
  • Click Refresh.
  • Click Print Report or Export to Excel.
  • For information on this report, please see the video tutorial.
CARES SBA-PPP: Loan Forgiveness Payroll Cost Details
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness Payroll Cost Detail Report.
  • From the Covered Period calculation field, select either 8 weeks or 24 weeks
  • Enter the report Start date.

    Select the beginning date of the Covered Period based upon the date of first disbursement of loan proceeds or, if you pay employees weekly and/or bi-weekly, you may use an Alternative Payroll Covered Period, beginning on the first day of the first pay period following disbursement of your loan. Since PPP loans were available as of April 2020, RUN will only allow the Start date to be 4/1/2020 or later.
  • If you are applying for forgiveness prior to the end of your Covered Period, select the number of weeks in the Optional Covered Period.
  • Click Refresh.
  • Click Print Report or Export to Excel.
CARES SBA – PPP: Loan Forgiveness Employee Wage Comparison
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness Employee Wage Comparison Report.
  • From the Covered Period calculation field, select either 8 weeks or 24 weeks
  • Enter the report Start date.

    Select the beginning date of the Covered Period based upon the date of first disbursement of loan proceeds or, if you pay employees weekly and/or bi-weekly, you may use an Alternative Payroll Covered Period, beginning on the first day of the first pay period following disbursement of your loan. Since PPP loans were available as of April 2020, RUN will only allow the Start date to be 4/1/2020 or later.
  • If you are applying for forgiveness prior to the end of your Covered Period, select the number of weeks in the Optional Covered Period
  • Click Refresh.
  • Click Print Report or Export to Excel
  • For information on this report, please see the video tutorial.
CARES SBA – PPP: Loan Forgiveness FTEE Comparison
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness FTEE Comparison.
  • From the Covered Period calculation field, select either 8 weeks or 24 weeks
  • Enter the report Start date.

    Select the beginning date of the Covered Period based upon the date of first disbursement of loan proceeds or, if you pay employees weekly and/or bi-weekly, you may use an Alternative Payroll Covered Period, beginning on the first day of the first pay period following disbursement of your loan. Since PPP loans were available as of April 2020, RUN will only allow the Start date to be 4/1/2020 or later.
  • If you are applying for forgiveness prior to the end of your Covered Period, select the number of weeks in the Optional Covered Period
  • Click Refresh.
  • Click Print Report or Export to Excel
  • For information on this report, please see the video tutorial.
CARES SBA–PPP: Loan Forgiveness Wage Reduction Safe Harbor
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness Wage Reduction Safe Harbor Report.
  • Enter the report End Date. The system will then calculate the start date by looking back 28 days.
  • Click Refresh.
  • Click Print Report or Export to Excel
CARES SBA–PPP: Loan Forgiveness FTEE Reduction Safe Harbor
  • Select Reports > Payroll > CARES SBA-PPP: Loan Forgiveness FTEE Reduction Safe Harbor Report
  • Enter the report End Date. The system will then calculate the start date by looking back 28 days.
  • Click Refresh.
  • Click Print Report or Export to Excel
PPP Forgiveness Report Package
  • Login to RUN Powered by ADP®.
  • In the navigation menu, select Reports, then select PPP Forgiveness Reports.
  • On the following screen, select Next to choose the pre-selected reports.
  • Next, confirm your dates and create the report package.
PPP Safe Harbor Report package
  • Login to RUN Powered by ADP®.
  • In the navigation menu, select Reports, then select PPP Safe Harbor Reports.
  • On the following screen, select Next to choose the pre-selected reports.
  • Enter the Safe Harbor date in the To date field. The From date will prepopulate with a date 28 days prior to the To date and cannot be changed.
  • Enter in a name in the Name your package field and click Create Package.
Need More Information on the Report?

Click here for Frequently Asked Questions, including greater detail about how the reports are calculated.

For detailed information about how you will use specific data fields in these reports to fill out your PPP Loan Forgiveness Application, please see the video tutorials:

ADP Workforce Now® and ADP® Comprehensive Services
What Reports do I Need?
  • 2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost provides the total payroll cost for all pay dates during the Covered Period. Employees are listed alphabetically in two separate groups: first are employees who did not earn more than $100,000 on an annualized basis in any single pay period in 2019 and employees who were not employed in 2019; and second are employees who earned, in at least one pay period in 2019, gross pay in excess of $100,000 on an annualized basis. For the Loan Forgiveness Application, these two groups of employees will need to be listed separately. The SBA payroll cost must be at least 60% of the total forgiveness amount.
  • 2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost Details provides the total payroll cost for all pay dates during the Covered Period, broken out by employee. The SBA payroll cost must be at least 60% of the total forgiveness amount.
  • 2020 CARES SBA - PPP: Loan Forgiveness Employee Wage Comparison helps show if there has been a reduction of wages for any employee of more than 25% between the selected covered period and the lookback period. Note that employees earning more than $100,000 on a prorated basis in any single pay period in 2019 are excluded from the wage comparison requirement. Also note that if you processed unpaid hours for any hourly employee, such as for unpaid leave, during one of the listed periods, you may need to manually adjust the employee’s calculated hourly rate. If you are applying for forgiveness before the end of your covered period, you can adjust the number of weeks that will be included in the report.
  • 2020 CARES SBA - PPP: Loan Forgiveness FTEE Comparison provides Full Time Equivalent Employee values for the FTEE calculation options and can be used to show if there has been a reduction of FTEEs between the selected Covered Period and the applicable Lookback Period.
  • 2020 CARES SBA – PPP: Loan Forgiveness Wage Reduction Safe Harbor: if you determine there has been a reduction of wages, this report is used to determine whether wages have been restored in order to restore the full loan forgiveness amount.
  • 2020 CARES SBA – PPP: Loan Forgiveness FTEE Reduction Safe Harbor: if you determine there has been a reduction of FTEEs, this report is used to determine whether FTEEs have been restored in order to restore the full loan forgiveness amount.
  • NOTE: if there are any days between the last pay date in your Covered Period and the end of your Covered Period, the Payroll Costs reports will not include the wages incurred during those days. However, the latest guidance from the government permits you to add the pay for employee wages incurred but not paid before the end of your Covered Period. For payroll paid after the end of your Covered Period that includes wages incurred during the Covered Period, we recommend running separate Payroll Cost Reports for this period and adding the proportionate share of incurred payroll costs to the totals before submitting to the SBA or your lender.
Where do I Find Them?
2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA-PPP: Loan Forgiveness Payroll Cost.
  • For guidance on how to run this report, please refer to our FAQs here.
2020 CARES SBA – PPP: Loan Forgiveness Payroll Cost Details
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA-PPP: Loan Forgiveness Payroll Cost Details.
  • For guidance on how to run this report, please refer to our FAQs here.
2020 CARES SBA – PPP: Loan Forgiveness Employee Wage Comparison
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA – PPP: Loan Forgiveness Employee Wage Comparison.
  • For guidance on how to run this report, please refer to our FAQs here.
2020 CARES SBA – PPP: Loan Forgiveness FTEE Comparison
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA – PPP: Loan Forgiveness FTEE Comparison.
  • For guidance on how to run this report, please refer to our FAQs here.
2020 CARES SBA - PPP: Loan Forgiveness Wage Reduction Safe Harbor
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA – PPP: Loan Forgiveness Wage Reduction Safe Harbor.
  • For guidance on how to run this report, please refer to our FAQs here.
2020 CARES SBA - PPP: Loan Forgiveness FTEE Reduction Safe Harbor
  • To generate this report, from the main navigation menu go to Reports > Custom Reports > Sample Reports > 2020 CARES SBA – PPP: Loan Forgiveness FTEE Reduction Safe Harbor.
  • For guidance on how to run this report, please refer to our FAQs here.
Need More Information on the Report?

Click here for Frequently Asked Questions, including greater detail about how the reports are calculated.

For detailed information about how you will use specific data fields in these reports to fill out your PPP Loan Forgiveness Application, please see the video tutorials:

ADP TotalSource®
What Reports do I need?
  • 2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost, provides the total payroll cost for all pay dates during the Covered Period. Employees are listed alphabetically in two separate groups: first are employees who did not earn more than $100,000 on an annualized basis in any single pay period in 2019 and employees who were not employed in 2019; and second are employees who earned, in at least one pay period in 2019, gross pay in excess of $100,000 on an annualized basis. For the Loan Forgiveness Application, these two groups of employees will need to be listed separately. The SBA payroll cost must be at least 60% of the total forgiveness amount.
  • 2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost Details, provides the total payroll cost for all pay dates during the Covered Period, broken out by employee. The SBA payroll cost must be at least 60% of the total forgiveness amount.
  • 2020 CARES SBA - PPP: Loan Forgiveness Employee Wage Comparison helps show if there has been a reduction of wages for any employee of more than 25% between the selected covered period and the lookback period. Note that employees earning more than $100,000 on a prorated basis in any single pay period in 2019 are excluded from the wage comparison requirement. Also note that if you processed unpaid hours for any hourly employee, such as for unpaid leave, during one of the listed periods, you may need to manually adjust the employee’s calculated hourly rate.
  • 2020 CARES SBA - PPP: Loan Forgiveness FTEE Comparison provides Full Time Equivalent Employee values for the FTEE calculation options and can be used to show if there has been a reduction of FTEEs between the selected Covered Period and the applicable Lookback Period.
  • 2020 CARES SBA – PPP: Loan Forgiveness Wage Reduction Safe Harbor: if you determine there has been a reduction of wages, this report is used to determine whether wages have been restored in order to restore the full loan forgiveness amount.
  • 2020 CARES SBA – PPP: Loan Forgiveness FTEE Reduction Safe Harbor: if you determine there has been a reduction of FTEEs, this report is used to determine whether FTEEs have been restored in order to restore the full loan forgiveness amount.
  • NOTE: If there are any days between the last pay date in your Covered Period and the end of your Covered Period, the Payroll Costs reports will not include the wages incurred during those days. However, the latest guidance from the government permits you to add the pay for employee wages incurred but not paid before the end of your Covered Period. For payroll paid after the end of your Covered Period that includes wages incurred during the Covered Period, we recommend running separate Payroll Cost Reports for this period and adding the proportionate share of incurred payroll costs to the totals before submitting to the SBA or your lender.
Where do I find them?
2020 CARES SBA - PPP: Loan Forgiveness Payroll Cost
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness Payroll Cost or CARES SBA - Paycheck Protection Program: Monthly Payroll Cost.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
2020 CARES SBA – PPP: Loan Forgiveness Payroll Cost Details
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness Payroll Cost Report – Employee Level or CARES SBA - PPP: Loan Forgiveness Payroll Cost Details.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
2020 CARES SBA – PPP: Loan Forgiveness Employee Wage Comparison
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness Employee Wage Comparison or CARES SBA-PPP: Loan Forgiveness Employee Wage Comparison.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
2020 CARES SBA – PPP: Loan Forgiveness FTEE Comparison
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness FTEE Comparison or CARES SBA-PPP: Loan Forgiveness FTEE Comparison.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
2020 CARES SBA - PPP: Loan Forgiveness Wage Reduction Safe Harbor
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness Wage Reduction Safe Harbor or CARES SBA-PPP: Loan Forgiveness Wage Reduction Safe Harbor.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
2020 CARES SBA - PPP: Loan Forgiveness FTEE Reduction Safe Harbor
  • From the TotalSource home page COVID-19 pop-up, click Access the reports you’ll need or Gather what you need to apply.
  • Look for the report named 2020 CARES SBA-PPP: Loan Forgiveness FTEE Reduction Safe Harbor or CARES SBA-PPP: Loan Forgiveness FTEE Reduction Safe Harbor.
  • For instructions on how to run this report, please login. You’ll find the instructions on the home page.
Need More Information on the Report?

For instructions on how to run this report, please login. You’ll find the instructions on the home page.

For detailed information about how you will use specific data fields in these reports to fill out your PPP Loan Forgiveness Application, please see the video tutorials:

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Additional Resources / FAQs

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* All reports may not be available to all clients. ADP does not provide financial or legal advice. Companies should contact their financial or legal advisors or the Small Business Administration for more information regarding eligibility and their application.