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Free PPP Calculator: PPP Loan Forgiveness Calculations Guide

By February 26, 2021 No Comments

This page was updated on 2/26/2021

The Biden Administration has made strides to deliver equitable relief to small businesses with the Paycheck Protection Program in 2021. PPP1 funding left behind many small and minority-owned businesses in 2020, but now, PPP2 funding will better serve entrepreneurs and startups. Below are some of the changes:

  • The share of PPP2 funding going to small businesses with fewer than ten employees is up nearly 60 percent from PPP1.
  • The share of PPP2 funding going to small businesses in rural areas is up nearly 30 percent from PPP1.
  • The share of PPP2 funding distributed through Community Development Financial Institutions and Minority Depository Institutions is up more than 40 percent from PPP1.

The Biden Administration also has announced several reforms to build on these efforts, one of which is a specific window for small business applications, better guaranteeing that funding doesn’t run out again.

For two weeks, ending on March 10,  the Small Business Administration will only accept applications for PPP loans from firms with fewer than 20 employees.

Why? The goal is to even the playing field for firms that make up most of the small business community  98% of small businesses employ fewer than 20 people but have only received 45% of PPP funding thus far, according to the SBA.

If your business has fewer than 20 employees and is eligible, don’t miss out on this window of time! If you have more than 20 employees, please continue to apply with your bank, remember this rule applies to the SBA, so your bank is likely to continue to accept applications and will just hold your application as the SBA opens up applications again and you will be at the front of the line.

The latest round of PPP loan applications closes on March 31, 2021. You can read more about this announcement here.

While PPP1 and PPP2 loan applications are open again, you still may be asking yourself some of these questions:

  • How do I calculate PPP Loan Forgiveness?
  • How do I plan for spending?
  • Do I choose 8 weeks or 24 weeks?
  • When will my bank forgive my loan?

We dug through two main sources to get you the answers – the Cares Act and the SBA’s Interim Final Rule. Even the name interim final rule suggests that the Treasury is building the plane while we are flying in it. We can’t get caught up in that though. We have to get to the next steps. 

Why did we create a PPP Forgiveness Calculator?

We put together a free PPP Forgiveness Calculator to help with the documentation requirements we are expecting. There are two main areas that we focus on in the calculator:

  1. The forgiveness percentage which is based on number of employees you still have at the end of the period
  2. Qualified costs – we dig in line by line on each allowable cost.

The SBA also published a new EZ version of the forgiveness application that applies to borrowers that:

  • Are self-employed and have no employees; OR
  • Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
  • Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%

If the EZ form applies to you, our calculator will serve more as a central place for data collection and less as a calculator thanks to some of the new rules passed in June. However, if you need to file the Full Forgiveness Application, the calculator will help with both data collection and your calculations.

We have added step-by-step instructions to every tab in the calculator to make it easy as possible to use. We’ve also created a short instructional video to help walk you through the process of how to calculate PPP at the bottom of this post.

Here’s a nice review we received from someone who used the free CFO Office Hours to have his PPP questions answered.

I contacted Kerry in reference to PPP loan questions I had not been able to find answers to. I spoke to my bank where I received my loan and the HR group my association was working with, and still could not get answers to many of my questions. Kerry was very much on top of his game. He answered all of my questions and now I am finally able to start my spreadsheets with confidence. Would highly recommend.

Additionally, we are now offering PPP loan forgiveness calculations as a service for a flat fee of just 2% of the loan amount. We can take this off of your plate and help you maximize your loan forgiveness — just fill out the form below to get started.

PPP Loan Forgiveness Calculations Service

Another related question we’ve been getting is about whether or not PPP loan forgiveness is taxable. For answers on this topic, check out this blog post.

Additional Resources for Your Business During COVID-19

Hopefully this helps! If you have additional questions, feel free to reach out to us at [email protected], or schedule a free 30-minute session with one of our CFOs.

Video Transcript

Hi, I’m Matthew May, one of the founders of Acuity. We outsource the accounting function for hundreds of companies, and we’ve been working a lot lately on helping people through the payroll protection program. There’s a lot of information out there, so we went back to the source — back to the CARES Act and to the SBA interim rule — and built a free loan forgiveness calculator. 

We’re getting asked a few questions from those who’ve been lucky enough to get the PPP loans, so we wanted to make sure you can plan accordingly. There are two main things to focus on. The first thing you should do is to get a sense of the forgiveness calculation itself, even though there’s likely going to be diversity practice with the banks. Second, get the documents ready that you have to provide to your banks.

We have some resources and instructions available on our website that can help guide you through the process, including a COVID blog and available office hours if you prefer to talk to somebody in the office or by email. 

Now, here’s how to use our free PPP forgiveness calculator. First, you’ll want to make a copy of this document. Throughout the sheet, you’ll see blue cells that you can highlight and input information — I’ve included instructions on every tab, as well as the original sources so that you can see where we got the information in case anything changes. We’ve documented that for you so you understand what that is and then if you get stuck, you can just email us with questions on the forgiveness tab.

We have a couple of items in blue where you’ll enter the date you received your funds (because that starts the clock for the eight-week period) and we’ve got to calculate what’s called “qualified expenses” and “qualified costs.” You enter your loan amount in here, and you’re going to track your interest accrued because that might be forgivable depending on if they use the exact definition or the definition in the SBA interim rule.

Next, you’ll enter the number of employees — that gives you your forgiveness percentage. There are a couple of “gotchas” here, so we’ve included some notes on this as there are additional things you’ll need to consider. For example, if you did reductions in salaries versus terminations, or if you have seasonal employees, you’ve got to do some extra work on the next page after we’ve gotten to the forgiveness percentage.

Now, we’ll need to work on the qualified costs, which we’ve split into several categories as defined by the SBA: payroll-related owner compensation replacement, mortgage interest, rent, and utilities. Each of those items has a tab, and you can see there is an eight-week payroll cap for each individual at $15,000. Your qualifying period will calculate for you within the document based on when you got your loan, and you’ll have to prorate some of these things.

Don’t forget your payroll-related expenses — things like health expenses, retirement contribution, and state taxes — that also qualify. You’ll see we’ve included a source that explains that, but you do have to back it out for the non-prorated period. You can also include any owner compensation in there. On the owner compensation replacement, there is a formula in here, and they’re going to do that based on that income. There’s not much guidance if you are a business owner or have two employees. They can be included in the payroll calculation or here — we don’t expect them to be included on both.

Next, you can skip the mortgage interest tab if you don’t own the building you’re in. If you do, obviously you’re going to prorate that interest and put it here. If you have rent, as opposed to own the building, you can include those descriptions here and make sure to correct it. And then, utilities — we think utilities are gonna be pretty heavily scrutinized, so make sure to only use the ones that are related to your rent or facility. See the official sources we’ve included about the final rule in the CARES Act. 

Thanks for your time. I’m Matthew with Acuity, and we help companies outsource their accounting function. We’ve wanted to let you know that, at this time, we’re offering free 30 minutes with any of our CFOs to talk through your circumstances or chat about anything you need right now during this crazy time.