PPP Loan Tracking and Forgiveness Calculator

PPP Loan Tracking and Forgiveness Calculator

June 17, 2020

(Will be updated as further guidance is issued by SBA, so check back for updates)

The Paycheck Protection Program (“PPP”) loan amount will be forgiven in its entirety as long as: (a) the loan proceeds are used to cover payroll costs, most mortgage interest, rent, and utility costs over the eight-week period after the loan is made; (b) employee headcount is maintained; (c) compensation levels for employees earning less than $100,000 per year are maintained; and (d) not more than 40% of the forgiveness amount is used for non-payroll costs. To the extent that any of these factors are not satisfied fully (or a business does not use the full amount of the PPP loan in the eight-week period after the loan is made), a portion of the loan will not be forgiven and must be repaid. 

Potentially forgivable PPP loan funds include amounts used for allowable costs over the 8 or 24 week period, subject to limitations on non-payroll costs. The additional forgiveness analysis of a PPP loan requires a three-step analysis based on the following three metrics: (1) Reduction in Headcount, (2) Reduction in Wages, and (3) Rehires, all of which are discussed in more detail below. Additionally, the PPP Loan Tracking and Forgiveness Calculator enables a borrower to quantify this three-step process to analyze under what conditions such a loan can be forgiven and for what amount.

1. Reduction in Headcount

Multiply the amount of the loan which qualifies for forgiveness by the following fraction:

2. Reduction in Wages

Subtract a dollar amount computed as follows:

That aggregate dollar amount further decreases the amount of the loan that is forgivable.

The Applicable Employees are only those employees whose wages/salary rates were not greater than $100,000 annually during 2019.

Additionally, the calculation excludes any current employee who in 2019 had a variable pay arrangement (overhead, commissions, etc.) and/or who earned more than $8,333 in any month.

3. Rehires

Correct decreases from either of the first or second step, respectively, as follows:

The Rehire step is meant to motivate companies to use loan proceeds to restore headcount AND wage levels. If you do both, then the full loan amount can be forgiven. If you do one or the other, then one reduction, or the other, can be ignored but there is no proportional relief for restoring part of one or part of the other.

The SBA continues to produce new and revised guidance on this program, which may result in changes to this analysis and spreadsheet. This spreadsheet is provided as an educational tool to assist potential borrowers of a PPP loan in generally understanding the mechanism by which their loan may be forgiven in whole or in part but should not be relied upon as the final determination of such forgiveness amount. Borrowers should work with their lenders to determine the forgivable amount of their loan.