PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES · 2021. 1. 19. · PYCHCK PTCTN PG (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES ® Chase for Business Loan Forgiveness

FORM 3508EZ FORM 3508EZ FORM 3508EZ

EXAMPLE 1

ABC Cookies

EXAMPLE 2

A&A IT Consulting

EXAMPLE 3

Finn’s Sporting Goods

Business type Self-employed, Sole Proprietor or Single-member Limited Liability Company (LLC)

Limited Liability Company (LLC)

Limited Liability Company (LLC)

Employees None Yes Yes

Types of costs Payroll and non-payroll

Payroll only Payroll and non-payroll

This document includes Loan Forgiveness examples to help business owners like you complete the pre-work required to request Forgiveness. These examples illustrate how to calculate your loan Forgiveness amount.

Click on the examples in the chart below to review the calculations required. While all of the specifics may not fit your business, the examples should help you.

Before starting your Forgiveness request online through Chase, you’ll want to use your own costs to complete the calculations for your business.

We hope these examples give you confidence in navigating Form 3508EZ.

IMPORTANT NOTE: For informational purposes only: Examples described may not be appropriate for every business, and do not take the place of legal, tax or accounting advice for your situation. You should carefully consider your needs and objectives before making any decisions, and consult the appropriate professional(s). This information is dated 11/04/2020 and is subject to change. For the most recent details, visit SBA.gov and Treasury.gov.

JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender. © 2020 JPMorgan Chase & Co.

PAYCHECK PROTECTION PROGRAM (PPP)LOAN FORGIVENESS PRE-WORK EXAMPLES

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Chase for Business | Loan Forgiveness pre-work examples 2

ABC Cookies received $20,833.00 in a PPP loan on May 4, 2020, and spent the funds across an 8-week Covered Period, which ended on June 29.

Because ABC Cookies is a Schedule C Sole Proprietorship and can check Box 1 on Form 3508EZ Instructions, it can use the SBA Form 3508EZ.

We’ll show how this business calculated its Loan Forgiveness amount. We’ll walk you through ABC Cookies’ SBA Form as well as additional calculations it needs to make along the way.

You’ll want to complete the steps below for your own business before starting your Forgiveness request online through Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind that Chase’s online request closely mirrors the SBA Form you choose.

Business typeSELF-EMPLOYED SCHEDULE C SOLE PROPRIETOR

EmployeesNONE

Covered Period8 WEEKS

Eligible payroll costsYES

Eligible non-payroll costsYES

SBA Form used3508EZ

PRE-WORK EXAMPLE 1

ABC Cookies

https://home.treasury.gov/system/files/136/PPP-Loan-Forgiveness-Application-Form-EZ-Instructions.pdf


STEP 1Calculate payroll costs

On Line 1, ABC Cookies enters the payroll costs incurred or paid during the Covered Period.

There are caps on the salaries for owner employees making more than $100,000.00. If your business is using the 8-week Covered Period (as ABC Cookies is), owner compensation is capped at $15,385.00. If using the 24-week Covered Period, owner compensation is capped at $20,833.00.

While completing the request online, remember to click on all the dropdown arrows to view important information such as “eligible payroll costs and instructions.” We created the dropdowns to help you along the way. Because ABC Cookies is a Sole Proprietorship and has no employees, it uses only owner compensation as cash compensation for employees, and employee benefits are not eligible for Forgiveness.

ABC Cookies only has one owner who makes more than $100,000.00 annually, so it enters $15,385.00 (the capped amount) on Line 1.

LINE 1. Payroll Costs = $15,385.00

Because ABC Cookies does not have employees and its payroll costs are lower than its loan amount, it will move on to Lines 2–4.

STEP 2Calculate non-payroll costs (Lines 2 through 4)

Eligible non-payroll costs include business mortgage interest payments, business rent or lease payments and business utility payments. Your business must have taken on these obligations before Feb. 15, 2020.

On Lines 2 through 4, enter the eligible costs paid or incurred during your Covered Period.

For ABC Cookies:

LINE 2. Business mortgage interest payments: $0.00

Line 3. Business rent or lease payments: $7,000.00

Line 4. Business utility payments: $3,000.00

Total non-payroll costs: $10,000.00

TIPIf your calculated payroll costs on Line 1, including Salary/Hourly Wage Reduction and FTE information (if applicable), are equal to or greater than your PPP loan amount, you can request Forgiveness for your full PPP loan without submitting your non-payroll costs.

Keep in mind: Once we submit your Forgiveness request to the SBA, you might not be able to submit additional supporting payroll or non-payroll costs or documents in support of your request.

NOTE Your incurred or paid payroll costs could be more than your PPP loan amount. That’s OK.


STEP 3Potential Forgiveness amounts

Chase will pre-populate Lines 5 through 7.

For ABC Cookies:

LINE 5. The sum of Lines 1 through 4: $25,385.00

LINE 6. PPP loan amount: $20,833.00

Using the SBA’s formula, Line 7 is calculated by dividing your payroll costs (Line 1) by 0.60. If Line 7 is equal to or greater than Line 6 (your PPP loan amount), you’ve spent at least 60% of your loan on payroll costs.

For ABC Cookies:

LINE 7. Payroll cost calculation: $25,641.67

Line 7 ($25,641.67) is greater than Line 6 ($20,833.00), so ABC Cookies spent at least 60% of its loan on payroll costs.

STEP 4Your Forgiveness amount

We’ll pre-populate Line 8.

Line 8 will be the lowest of Lines 5, 6 or 7.

For ABC Cookies:

LINE 8. Forgiveness amount: $20,833.00

TIPIf your Forgiveness amount requested is less than your loan amount and you think you still have time to use the extra funds, you may want to consider submitting your request later.


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A&A IT Consulting received $100,962.00 in a PPP loan on June 22, 2020 and used the funds across 19 weeks. It is ready to request Forgiveness before the end of its Covered Period.

A&A is structured as a Limited Liability Company with employees. All of its employees earn under $100,000.00 annually.

A&A can use the SBA Form 3508EZ because it can check Box 2 on Form 3508EZ Instructions and had no reduction in employees, employee hours or employee salaries/hourly wages.

We’ll show how this business calculated its Loan Forgiveness amount. We’ll walk you through A&A’s SBA Form as well as additional calculations it needs to make along the way.

You’ll want to complete these steps for your own business before starting your Forgiveness request online through Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind that Chase’s online request closely mirrors the SBA Form you choose.

Business type LIMITED LIABILITY COMPANY (LLC)

Employees YES

Covered Period 24 WEEKS

Eligible payroll costs YES

Eligible non-payroll costs NO

SBA Form used 3508EZ

PRE-WORK EXAMPLE 2

A&A IT Consulting




On Line 1, A&A will enter the payroll costs it incurred or paid during the Covered Period.

The SBA salary caps are based on an 8-week or 24-week Covered Period depending on when you received your funds. However, if your business, like A&A’s, spent your loan funds in less time, you calculate the salary cap based on the number of weeks during which you spent the funds. For example, if an employee made over $100,000.00 annually, you would calculate their salary cap by dividing $100,000.00 by 52 weeks, then multiplying by the number of weeks the money was spent. In this case, it was 19 weeks.

$100,000.00 ÷ 52 = $1,923.08 $1,923.08 x 19 = $36,538.46

Because A&A Consulting has employees, it will include:

• Employee cash compensation

• Employee benefits like health insurance and retirement plans

• Employer state and local taxes paid by the business and assessed on employee compensation

• Owner compensation

To calculate how much it has spent on employee cash compensation, A&A will use Table 1 from the Schedule A Worksheet found in SBA Form 3508.

To submit its request, A&A will use Form 3508EZ.

Step 1-A

A&A fills in Columns 1 and 2 for all employees who are paid less than or equal to $100,000.00 annually. The Employee Identifier in Column 2 is the last 4 digits of each employee’s Social Security number.

Example SBA Form 3508, Table 1, Schedule A Worksheet:

NOTE There are caps on salaries for employees making more than $100,000.00. If your business is using the 24-week Covered Period, eligible individual salaries are capped at $46,154.00. If using the 8-week Covered Period, eligible individual salaries are capped at $15,385.00.

Owner compensation is capped at $20,833.00 for 24 weeks and $15,385.00 for 8 weeks.

Column 1 Column 2 Column 3 Column 4 Column 5

Employee’s NameEmployee Identifier Cash Compensation Average FTE

Salary/Hourly Wage Reduction

Kimberly 1234Jay 5678

Elsie 9101Rafael 1121Xavier 3141Hideko 5161Sam 7181

FTE Reduction Exceptions:Totals: Box 1 Box 2 Box 3

NOTE While completing the Chase request online, remember to click on all the dropdown arrows to view important information such as “eligible payroll costs and instructions.” We created the dropdowns to help you along the way.

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf


Step 1-B

A&A then calculates payroll costs at an annualized rate during the Covered Period in Column 3. This takes some extra work because the calculations aren’t included on the SBA Table 1. To help you, we’ve created a sample worksheet.

Chase sample worksheet 1 (not included in the SBA instructions):

Column 1: Employee names. If you need more rows for your business, add them.

Column 2: Shows the annual salary of each employee. In this example, all A&A employees earn less than $100,000.00 annually. If you had employees who earned more than $100,000.00 annually, you would need to also fill out Table 2 in the Schedule A Worksheet in SBA Form 3508.

Column 3: Enter the weekly salaries for each employee by dividing Column 2 by 52 for the number of weeks in a year.

Column 4: Enter 8 or 24 for the number of weeks during which you spent the funds, unless you spent the money faster. A&A spent all its funds in 19 weeks, so it enters 19.

Column 5: Calculate the annualized salary of each employee during the time in which you spent the funds. A&A multiplies Column 3 by Column 4 to calculate what each employee would have been paid during the 19 weeks at their normal rate.

Column 6: In your payroll documents, locate the actual cash compensation you incurred or paid each employee and enter it in Column 6. A&A’s payroll documents show the amount it paid each employee during the 19 weeks. In this example, A&A kept Elsie and Rafael at their pre-PPP loan salary levels.

Take the numbers from Column 6 from the Chase worksheet and fill in Column 3 “Cash Compensation” in SBA Table 1.

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued):




Kimberly 1234 $ 18,000.00Jay 5678 $ 21,000.00

Elsie 9101 $ 29,230.74Rafael 1121 $ 28,500.00Xavier 3141 $ 29,500.00Hideko 5161 $ 30,000.00Sam 7181 $ 20,000.00

FTE Reduction Exceptions: $ 176,230.74Totals: Box 1 Box 2 Box 3

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6

EMPLOYEE ANNUAL SALARIES WEEKLY SALARIESNUMBER OF WEEKS A&A IS REQUESTING FORGIVENESS FOR

ANNUALIZED SALARY DURING THE 19 WEEKS

ACTUAL CASH COMPENSATION A&A

INCURRED OR PAID DURING THE 19 WEEKS

Kimberly $ 60,000.00 $ 1,153.85 19 $ 21,923.15 $ 18,000.00Jay $ 65,000.00 $ 1,250.00 19 $ 23,750.00 $ 21,000.00

Elsie $ 80,000.00 $ 1,538.46 19 $ 29,230.74 $ 29,230.74Rafael $ 78,000.00 $ 1,500.00 19 $ 28,500.00 $ 28,500.00Xavier $ 87,000.00 $ 1,673.08 19 $ 31,788.52 $ 29,500.00Hideko $ 88,000.00 $ 1,692.31 19 $ 32,153.89 $ 30,000.00

Sam $ 67,000.00 $ 1,288.46 19 $ 24,480.74 $ 20,000.00

For example:Kimberly’s annual salary of $60,000.00 ÷ 52 = 1,153.85

For example: Kimberly’s weekly salary of $1,153.85 x 19 = $21,923.15





Kimberly 1234 $ 18,000.00 1.0Jay 5678 $ 21,000.00 1.0

Elsie 9101 $ 29,230.74 1.0Rafael 1121 $ 28,500.00 1.0Xavier 3141 $ 29,500.00 1.0Hideko 5161 $ 30,000.00 1.0Sam 7181 $ 20,000.00 1.0

FTE Reduction Exceptions: $ 176,230.74 7.0Totals: Box 1 Box 2 Box 3

NOTE The SBA has outlined two methods for calculating FTE:

• Simplified Method: Assign 1.0 for employees who worked 40 hours or more each week and 0.5 for employees who worked fewer than 40 hours.

• Detailed Method: For each employee, enter the average number of hours paid per week, then divide by 40, and round the total to the nearest 10th. The maximum for each employee is 1.0.

Step 1-C

A&A calculates its average Full-Time Equivalency (FTE).

To show how, we created another sample worksheet below for A&A’s employees. Each A&A employee worked 40 hours or more each week during the Covered Period, so 1.0 is entered in Column 3 for each employee.


Step 1-D

A&A now goes back to Payroll Table 1, Column 4 and enters a 1.0 next to each employee and 7.0 in Box 2 (see below).

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued)

Each A&A employee worked 40 hours per week, and the company elected to use the Simplified Method.

COLUMN 1 COLUMN 2 COLUMN 3

EMPLOYEE HOURS WORKED SIMPLIFIED METHOD

Kimberly 40 1.0

Jay 40 1.0

Elsie 40 1.0

Rafael 40 1.0

Xavier 40 1.0

Hideko 40 1.0

Sam 40 1.0

AVERAGE FTE (BOX 2): 7.0


Step 1-E

A&A calculates if it reduced any employee’s salary or hourly wages by more than 25% during the time the business spent its funds.


For each A&A employee, divide 1a by 1b. In this example, no employee who makes $100,000 or less was reduced by more than 25%. Therefore, A&A can skip Steps 2 and 3 in the SBA Schedule A Worksheet.

Step 1-F

A&A goes back to the SBA Form and enters a ”0” for each employee in Column 5 “Salary/Hourly Wage Reduction.”





Kimberly 1234 $ 18,000.00 1.0 0Jay 5678 $ 21,000.00 1.0 0

Elsie 9101 $ 29,230.74 1.0 0Rafael 1121 $ 28,500.00 1.0 0Xavier 3141 $ 29,500.00 1.0 0Hideko 5161 $ 30,000.00 1.0 0Sam 7181 $ 20,000.00 1.0 0

FTE Reduction Exceptions: $ 176,230.74 7.0 0Totals: Box 1 Box 2 Box 3

STEP 1

HOW MUCH DID YOUR BUSINESS REDUCE WAGES? KIMBERLY JAY ELSIE RAFAEL XAVIER HIDEKO SAM

1aEnter average annual salary or hourly

wage during Covered Period or Alternative Payroll Covered Period

$18,000.00 $21,000.00 $29,230.74 $28,500.00 $29,500.00 $30,000.00 $20,000.00

1bEnter average annual salary or

hourly wage between Jan. 1, 2020, and March 31, 2020

$21,923.15 $23,750.00 $29,230.74 $28,500.00 $31,788.52 $32,153.89 $24,480.74

1c Divide the value entered in 1a by 1b 82% 88% 100% 100% 93% 93% 82%

If 1c is 0.75 or more, enter zero in the column above Box 3 for that employee; otherwise proceed to Step 2

NOTE: If your business chose the 24-week Covered Period, 1b would be a reference period 24 weeks prior to obtaining your loan

TIPThe SBA only requires businesses to include Wage Reduction totals for employees who make $100,000.00 or less in annualized Covered Period salary. Follow steps 1a through 1c within the chart to determine an answer for your own business.

NOTEIf A&A paid any employees $100,000.00 or more annually, it would have filled out Columns 1 through 4 of Table 2 in the Schedule A Worksheet, using the same calculation methodology and recognizing the caps on compensation during the 8- or 24-week Covered Period. There is no Salary/Hourly Wage Reduction column on Table 2 because the SBA does not factor in reductions of employees who are paid $100,000.00 or more.


Step 1-G

Now A&A can fill out SBA Form 3508EZ. It starts by calculating the total Cash Compensation for its employees (Column 3 on Payroll Table 1) during the 19 weeks of the Covered Period. A&A also will include any employee benefits and owner compensation. We’ve outlined those below:

Cash Compensation: $176,230.74

Employee benefits: $10,000.00

Gather this information from your payroll documentation for the weeks you spent your funds.

Owner compensation: $16,492.79

This is the 19-week cap for compensation for an owner who is paid $100,000.00 or more annually.

The calculation: Divide the owner compensation cap of $20,833.00 by 24 weeks — because A&A is using a 24-week Covered Period — and multiply that by 19 for the number of weeks A&A spent their funds.

A&A totals the above (Cash Compensation + Employee Benefits + Owner Compensation) and enters it on Line 1.

LINE 1. Payroll Costs: $202,723.53

Step 1-H

If your payroll costs including Salary/Hourly Wage Reduction and FTE information are equal or greater than your PPP loan amount, Chase will present you with this option.

Based on the payroll, Salary/Hourly Wage Reduction and FTE information you entered, you can request Forgiveness for the full PPP loan amount without entering your non-payroll costs. Would you like to proceed using payroll costs only? If you answer “yes,” please skip Lines 2 through 4. Any information previously entered on these lines will be removed if you choose “yes.”

Because A&A has entered payroll costs greater than its loan amount, it already qualifies for consideration of full Forgiveness and does NOT need to submit any non-payroll costs. A&A would check “yes” below.

Yes

No

NOTEIf your calculated payroll costs in Line 1, including Salary/Hourly Wage Reduction and FTE information (if applicable), are equal to or greater than your PPP loan amount, you can request Forgiveness for your full PPP loan without submitting your non-payroll costs.


NOTEYour incurred or paid payroll costs could be more than your loan amount. That is OK.

For example: $20,833.00 ÷ 24 = $868.04$868.04 x 19 = $16,492.76





For A&A IT Consulting:

LINE 2. Business mortgage interest payments: Skipped

LINE 3. Business rent or lease payments: Skipped

LINE 4. Business utilities payments: Skipped


Chase will pre-populate Lines 5 through 7 for you when you submit your online Forgiveness request.



LINE 6. PPP loan amount $100,962.00


LINE 7. Payroll cost 60% requirement $337,872.55

Line 7 ($337,872.55) is greater than Line 6 ($100,962.00), so A&A IT Consulting has spent at least 60% of its loan on payroll costs.





LINE 8. Forgiveness amount $100,962.00




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PRE-WORK EXAMPLE 3

Finn’s Sporting GoodsFinn’s Sporting Goods received $89,615.00 in a PPP loan on August 3, 2020, and spent the funds across an 8-week Covered Period. It is ready to request Forgiveness.

It is structured as a Limited Liability Company with employees. All of its employees earn under $100,000.00 annually. Finn’s reduced two employees’ salaries, but not by more than 25%.

Finn’s Sporting Goods can use SBA Form 3508EZ because it satisfies Boxes 2 and 3 on the Form 3508EZ Instructions regarding reduction in employee annual salary, hourly wages, number of employees and average paid hours and was unable to operate during the Covered Period at the same level of business activity as before Feb. 15, 2020.

We’ll show how this business calculated its Loan Forgiveness amount. We’ll walk you through Finn’s SBA Form as well as additional calculations it needs to make along the way.

You’ll want to complete these steps for your own business before starting your Forgiveness request online though Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind that Chase’s online request closely mirrors the SBA Form you choose.

Business type LIMITED LIABILITY COMPANY (LLC)

Employees YES

Covered Period 8 WEEKS

Eligible payroll costs YES

Eligible non-payroll costs YES

SBA Form used 3508EZ




On Line 1, Finn’s Sporting Goods will enter the payroll costs it incurred or paid during the Covered Period.

Because Finn’s Sporting Goods has employees, it will include:

• Employee cash compensation

• Employee benefits like health insurance and retirement plans

• Employer state and local taxes paid by the business and assessed on employee compensation

• Owner compensation

To calculate how much it has spent on employee cash compensation, Finn’s will use Table 1 from the Schedule A Worksheet found in SBA Form 3508.

To submit its request, Finn’s will use Form 3508EZ.

Step 1-A

Finn’s fills in Columns 1 and 2 for all employees who are paid less than or equal to $100,000.00 annually. The Employee Identifier in Column 2 is the last 4 digits of each employee’s Social Security number.

Example SBA Form 3508, Table 1, Schedule A Worksheet:

NOTE

• There are caps on salaries for employees making more than $100,000.00. If using the 8-week Covered Period, eligible individual salaries are capped at $15,385.00. If your business is using the 24-week Covered Period, eligible individual salaries are capped at $46,154.00.

• Owner compensation is capped at $15,385.00 for 8 weeks and $20,833.00 for 24 weeks.

• Your incurred or paid payroll costs could be more than your loan amount. That is OK.

• While completing the Chase request online, remember to click on all the dropdown arrows to view important information such as “eligible payroll costs and instructions.” We created the dropdowns to help you along the way.




Lee 1234Kye 5678

Esme 9101Antonio 1121Ahmed 3141Ashley 5161Sofia 7181

FTE Reduction Exceptions:Totals: Box 1 Box 2 Box 3

https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf


Step 1-B

Finn’s then calculates Cash Compensation at an annualized rate during the Covered Period in Column 3. This takes some extra work because the calculations aren’t included on the SBA Table 1. To help you, we’ve created a sample worksheet.


Column 1: Employee names. If you need more rows for your business, add them.

Column 2: Shows the annual salary of each employee. In this example, all Finn’s employees earn less than $100,000.00 annually. If you had employees who earned more than $100,000.00 annually, you would also need to fill out Table 2 in the Schedule A Worksheet in SBA Form 3508.

Column 3: Enter the weekly salaries for each employee by dividing Column 2 by 52 for the number of weeks in a year.

Column 4: Enter 8 or 24 for the number of weeks during which you spent the funds, unless you spent the money faster, then enter that number. For example, 15.

Column 5: Calculate the annualized salary of each employee during the time in which you spent the funds. Finn’s multiplies Column 3 by Column 4 to calculate what each employee would have been paid during the 8-week Covered Period at their normal rate.

Column 6: In your payroll documents, locate the actual cash compensation you incurred or paid each employee and enter it in Column 6. Finn’s payroll documents show the amount it paid each employee during the 8 weeks. In this example, Finn’s kept Esme and Antonio at their pre-PPP loan salary levels.

Take the numbers from Column 6 from the Chase worksheet and fill in Column 3 “Cash Compensation” in SBA Table 1.


COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6

EMPLOYEE ANNUAL SALARIES WEEKLY SALARIESNUMBER OF

WEEKS FINN’S IS REQUESTING

FORGIVENESS FOR

ANNUALIZED SALARY DURING THE 8 WEEKS

ACTUAL CASH COMPENSATION FINN’S

INCURRED OR PAID DURING THE 8 WEEKS

Lee $ 65,000.00 $ 1,250.00 8 $ 10,000.00 $ 8,000.00Kye $ 84,000.00 $ 1,615.38 8 $ 12,923.04 $ 10,000.00

Esme $ 48,000.00 $ 923.08 8 $ 7,384.64 $ 7,384.64Antonio $ 58,000.00 $ 1,115.38 8 $ 8,923.04 $ 8,923.04Ahmed $ 60,000.00 $ 1,153.85 8 $ 9,230.80 $ 8,700.00Ashley $ 79,000.00 $ 1,519.23 8 $ 12,153.84 $ 11,000.00Sofia $ 72,000.00 $ 1,384.62 8 $ 11,076.96 $ 10,500.00

For example: Lee’s weekly salary of $1,250.00 x 8 = $10,000.00




Lee 1234 $ 8,000.00Kye 5678 $ 10,000.00

Esme 9101 $ 7,384.64Antonio 1121 $ 8,923.04Ahmed 3141 $ 8,700.00Ashley 5161 $ 11,000.00Sofia 7181 $ 10,500.00

FTE Reduction Exceptions: $ 64,507.68Totals: Box 1 Box 2 Box 3





Lee 1234 $ 8,000.00 1.0Kye 5678 $ 10,000.00 1.0

Esme 9101 $ 7,384.64 1.0Antonio 1121 $ 8,923.04 1.0Ahmed 3141 $ 8,700.00 1.0Ashley 5161 $ 11,000.00 1.0Sofia 7181 $ 10,500.00 1.0

FTE Reduction Exceptions: $ 64,507.68 7.0Totals: Box 1 Box 2 Box 3

NOTE The SBA has outlined two methods for calculating FTE:

• Simplified Method: Assign 1.0 for employees who worked 40 hours or more each week and 0.5 for employees who worked fewer than 40 hours.

• Detailed Method: For each employee, enter the average number of hours paid per week, then divide by 40, and round the total to the nearest 10th. The maximum for each employee is 1.0.

Step 1-C

Finn’s calculates its average Full-Time Equivalency (FTE).

To show how, we created another sample worksheet below for Finn’s employees. Each Finn’s employee worked 40 hours or more each week during the Covered Period, so 1.0 is entered in Column 3 for each employee.


Step 1-D

Finn’s now goes back to Payroll Table 1, Column 4 and enters a 1.0 next to each employee and a 7.0 in Box 2 (see below).

Example SBA Form 3508, Schedule A Worksheet, Table 1 (continued)

Each Finn’s Sporting Goods employee worked 40 hours per week, and the company elected to use the Simplified Method.

COLUMN 1 COLUMN 2 COLUMN 3

EMPLOYEE HOURS WORKED SIMPLIFIED METHOD

Lee 40 1.0

Kye 40 1.0

Esme 40 1.0

Antonio 40 1.0

Ahmed 40 1.0

Ashley 40 1.0

Sofia 40 1.0

AVERAGE FTE (BOX 2): 7.0


Step 1-E

Finn’s calculates if it reduced any employee’s salary or hourly wages by more than 25% during the time the business spent its funds.


For each employee, divide 1a by 1b. In this example, no employee who makes $100,000.00 or less was reduced by more than 25%. Therefore, Finn’s can skip Steps 2 and 3 in the SBA Schedule A Worksheet.

Step 1-F

Finn’s goes back to the SBA Form and enters a ”0” for each employee in Column 5 “Salary/Hourly Wage Reduction.”





Lee 1234 $ 8,000.00 1.0 0Kye 5678 $ 10,000.00 1.0 0

Esme 9101 $ 7,384.64 1.0 0Antonio 1121 $ 8,923.04 1.0 0Ahmed 3141 $ 8,700.00 1.0 0Ashley 5161 $ 11,000.00 1.0 0Sofia 7181 $ 10,500.00 1.0 0

FTE Reduction Exceptions: $ 64,507.68 7.0 0Totals: Box 1 Box 2 Box 3

STEP 1

HOW MUCH DID YOUR BUSINESS REDUCE WAGES? LEE KYE ESME ANTONIO AHMED ASHLEY SOFIA

1aEnter average annual salary or hourly

wage during Covered Period or Alternative Payroll Covered Period

$8,000.00 $10,000.00 $7,384.64 $8,923.04 $8,700.00 $11,000.00 $10,500.00

1bEnter average annual salary or

hourly wage between Jan. 1, 2020, and March 31, 2020

$10,000.00 $12,923.04 $7,384.64 $8,923.04 $9,230.80 $12,153.84 $11,076.96

1c Divide the value entered in 1a by 1b 80% 77% 100% 100% 94% 91% 95%

If 1c is 0.75 or more, enter zero in the column above Box 3 for that employee; otherwise proceed to Step 2

NOTE: If your business chose the 24-week Covered Period, 1b would be a reference period 24 weeks prior to obtaining your loan

TIPThe SBA only requires businesses to include Wage Reduction totals for employees who make $100,000.00 or less in annualized Covered Period salary. Follow steps 1a through 1c within the below chart to determine an answer for your own business.

NOTEIf Finn’s paid any employees $100,000.00 or more annually, it would have filled out Columns 1 through 4 of Table 2 in the Schedule A Worksheet, using the same calculation methodology and recognizing the caps on cash compensation during the 8- or 24-week Covered Period. There is no Salary/Hourly Wage Reduction column on Table 2 because the SBA does not factor in reductions of employees who are paid more than $100,000.00.


Step 1-G

Now Finn’s can fill out SBA Form 3508EZ. It starts by calculating the total cash compensation for its employees (Column 3 on Payroll Table 1) during the 8-week Covered Period. Finn’s also will include any employee benefits and owner compensation. We’ve outlined those below:

Cash Compensation: $64,507.68

Employee Benefits: $5,000.00

Gather this information from your payroll documentation for the weeks you spent your funds.

Owner Compensation: $15,385.00

This is the 8-week cap for an owner who is paid $100,000.00 or more annually.

Finn’s totals the above (Cash Compensation + Employee Benefits + Owner Compensation) and enters it on Line 1.

LINE 1. Payroll Costs: $84,892.68




For Finn’s Sporting Goods:

LINE 2. Business mortgage interest payments: $0.00

LINE 3. Business rent or lease payments: $5,500.00

LINE 4. Business utility payments: $3,000.00

TOTAL NON-PAYROLL COSTS = $8,500.00

TIPIf your calculated payroll costs on Line 1, including Salary/Hourly Wage Reduction and FTE information (if applicable), are equal to or greater than your PPP loan amount, you can request Forgiveness for your full PPP loan without submitting your non-payroll costs.




Chase will pre-populate Lines 5 through 7 for you when you submit your online Forgiveness request.



LINE 6. PPP loan amount $89,615.00


LINE 7. Payroll cost 60% requirement $141,487.80

Line 7 ($141,487.80) is greater than Line 6 ($89,615.00 total PPP loan amount), so Finn’s Sporting Goods has spent at least 60% of its loan on payroll costs.





LINE 8. Forgiveness amount $89,615.00



Documents

PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES · 2021. 1. 19. · PYCHCK PTCTN PG (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES ® Chase for Business Loan Forgiveness