If your business has received a Small Business Administration loan through the Paycheck Protection Program (PPP), you might be wondering how much of that loan may be forgivable by the federal government. Many factors determine loan forgiveness, and government guidance is evolving and may change or clarify certain calculations. For the latest information on loan forgiveness, visit our PPP Guide which includes a checklist, FAQs and examples. To estimate how much of your loan may be forgiven, use the tool below.
Enter the amount of the PPP loan you received from your lender.
Enter your payroll costs for your covered period. Your covered period can be between 8 and 24 weeks, beginning on the date of disbursement of your loan. Guidance from the government indicates that borrowers are eligible for forgiveness for payroll costs paid and payroll costs incurred, but not yet paid, during the applicable Covered Period. Payroll costs incurred but not paid within the Covered Period must be paid by the next regular payroll date to be counted for forgiveness purposes.
Under the PPP, “payroll costs” generally include:
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. Also, borrowers cannot apply for forgiveness for payroll costs for which they receive an Employee Retention Credit.
Note: At least 60% of the forgiveness amount must be for payroll costs.
Up to 40% of the forgiveness amount to be used to pay any of the following non-payroll costs during the Covered Period:
Repayment of part of the loan may be required to the extent that any employee’s earnings are reduced by more than 25% during the Covered Period, compared to the most recent full calendar quarter prior to receipt of the loan. For this calculation, exclude any employee who received, during any single pay period in 2019, wages or salary at an annualized rate over $100,000. Then, for each employee, compare the average salary for salaried employees or average hourly rate for hourly employees between the most recent full calendar quarter prior to receipt of the loan by using the following calculation:
If there were no reductions in excess of 25%, enter zero for this field.
Note: The government has issued guidance to make clear that borrowers should not be doubly penalized by reductions in wages and FTEEs. Accordingly, reductions in average annual salary or average hourly wage should only be considered to the extent that they are not attributable to FTEE reductions.
Enter the average number of FTEEs during the Covered Period. For each employee, calculate the average number of hours paid per week during the applicable period, divide by 40, and round to the nearest tenth. The maximum for each employee is 1.0. Enter the sum of all employees. You may also choose to count 1.0 for employees working 40 or more hours per week and 0.5 for those working less than 40 hours per week. The government has not yet issued guidance as to employees for whom you do not track hours worked. For now, you can provide an estimate for these employees. Exclude employees for whom you provided an offer of rehire or terminated for cause, who voluntarily reduced hours or quit, or whom you have been unable to rehire or to hire similarly qualified replacements. 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). Note that you must maintain written documentation for employees who fall into this exclusion and must inform the applicable state unemployment office as to an employee’s refusal of rehire.
Enter your average number of FTEEs during the period from February 15 through June 30, 2019, or January 1 through February 29, 2020, at your option. Use the same methodology as you did above. Choosing the date range with the lower FTEE value will help maximize your forgiveness amount. If the number of your FTEEs is lower during the Covered Period than during both of these two time periods, the amount of loan forgiveness may be reduced proportionately. For more information about reductions in staffing levels, please see our Loan Forgiveness Checklist here.
Notes on your results:
* Note that borrowers who received loans in amounts 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. Borrowers who received PPP loans in amounts between $50,000 and $150,000 may also use SBA Form 3508S and can manually account for forgiveness reductions due to reductions of full-time equivalent employees or in salaries or wages.
**If you have reductions in FTEE levels during the covered period, you can consider rehiring employees by the end of the applicable Safe Harbor period, to help maximize loan forgiveness. If any reduction of FTEEs occurred from February 15 to April 26, 2020, and you fully restore the FTEE level by the end of the applicable Safe Harbor period, to equal or higher than FTEEs as of February 15, 2020, your loan forgiveness will not be reduced by any FTEE reduction during the covered 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. These restorations are not taken into account in the calculations above.
***This is the estimated loan principal that may be forgiven. The estimated PPP loan forgiveness amount is based on current guidance from the government and may change as additional guidance is issued.
****This number does not include interest that may also be owed on amounts that are not subject to forgiveness. Interest for PPP loans is calculated at 1% from the date of loan disbursement.
The PPP Forgiveness Estimator is based on the information you provide. It is for information purposes only and is provided based on current government guidance, which is subject to change. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the Forgiveness Estimator. ADP is not responsible for and provides no warranty as to the accuracy of this content. ADP does not provide legal, accounting or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.
Last Updated: March 10, 2021