Paycheck Protection Program Forgiveness Report
Background
If your company took out a Paycheck Protection Program loan, you can apply for forgiveness through your lender. You can use Patriot’s Paycheck Protection Program Forgiveness Report which will assist you in filling out your forgiveness application form.
For more general information, please read our help article, “How to Complete the PPP Loan Forgiveness Application.” Also, please refer to the SBA’s Paycheck Protection Program Loan Forgiveness information.
Utilizing the PPP Forgiveness Report
To access the report, go to Reports > Payroll Reports > Paycheck Protection Program Forgiveness Report.
To run the report, first, you will need to answer the following questions in the software:
- When did you receive your PPP loan? This is the “start” of your covered period.
- Select the end date of your covered period. This can be anywhere from 8 to 24 weeks after your “start” date.
- Select owner-employee
You will need to select any owners who have received W-2 wages. If the owners do not receive W-2 wages, you do not need to indicate them for the report.
- Click “Continue” and a PDF will download with your Paycheck Protection Program (PPP) Payroll Cost Report.
Use this document to help you fill out the payroll cost sections of your PPP loan forgiveness application. It will give you the amounts needed for filling out portions of Schedule A for the PPP loan forgiveness application.
More calculations on Patriot’s PPP loan forgiveness report will follow in the coming weeks to further assist you with your PPP loan forgiveness application.
FAQ’s about PPP Forgiveness Calculations
Question: Which payrolls are included in cash compensation?
The cash compensation column includes all payroll amounts PAID or INCURRED during the covered period. This definition is based on the documentation on the PPP Forgiveness Application.
- “Paid” means that any payroll with a pay date in the covered period will be fully included, even if the pay period is not in the covered period.
- “Incurred” means that any payrolls with pay dates outside of the covered period can still be fully or partially included depending on their pay period. If the whole pay period is within the covered period, then the payroll will be fully included in cash compensation. However, if only part of the pay period is within the covered period, we would prorate that payroll and only include part of it in the cash compensation.
Question: How are prorated payroll amounts calculated?
To calculate the partial amount for pay periods partially in the covered period, we prorate based on the number of days in the pay period and the number of days that fall into the covered period. Here’s an example:
Covered Period: 6/5/2020 – 11/19/2020
Pay Date: 11/30/2020
Pay Period: 11/1/2020 – 11/30/2020
Gross Pay: $2,000
To determine how much of this paycheck would be included in the cash compensation, we need to determine how much of the pay can be allocated to each day and then multiply that by the number of days in the covered period.
First, we divide the $2,000 gross pay by the number of days in the pay period (30), which gives us $66.67 per day.
Then we multiply that by the 19 days that fall between the beginning of the pay period and the end of the covered period (11/1 – 11/19) which gives us $1,266.67.
So for this payroll, we would include $1,266.67 of the $2,000 into the cash compensation amount.
Question: Why doesn’t the PPP Forgiveness Report match the Payroll Details for the same period?
The Payroll Details Report shows you any payrolls with a pay date in the period you’ve selected, but the PPP Forgiveness Report also includes amounts incurred during the period and paid after. For more information on how that calculation works, see the previous question.
Question: I have an Employee in Table 2, but they didn’t make $100,000 in 2019. Why are they in Table 2?
To determine if an employee should be in Table 1 or Table 2, we have to determine if the annualized amount from ANY paycheck the employee received in 2019 would have been over $100,000. To annualize a paycheck, we divide the wages by the number of days in the pay period and multiply the result by 365. This can result in employees who made much less than $100,000 in 2019 being included in Table 2 (based on their pay periods). Here are some examples:
If an employee received only one paycheck in 2019, and it was for $5,000 with a pay period of one week, they would end up in Table 2. To find the annualized amount on this paycheck, you would divide the $5,000 by the seven days in the pay period, which gives you $714.29 per day. Then, you multiply that by 365, and you get $260,714.29, which is well over the $100,000 threshold for Table 2.
Another example could be where an employee is paid a bonus of $300. If the employer entered that bonus with a pay period of 1 day, the employee could end up in Table 2. You would take the $300 and divide by the days in the pay period—in this case, 1—which still gives you $300. Then, you multiply that by 365, and you get $109,500, which is again over the $100,000 threshold to be included in Table 2.
If you aren’t sure why an employee is in Table 2, look at all of the 2019 paychecks for the employee, and look for any paychecks with short pay periods.
Question: What is the significance of having employees in Table 1 or Table 2?
Employees in Table 1 can be subject to wage reduction penalties that can reduce the employer’s overall forgiveness. However, employees in Table 2 are not subject to the same wage reduction calculation.
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