To get started on your PPP loan forgiveness application we suggest starting with the PPP Schedule A (Page 3 of SBA Form 3508). The easiest way to fill out the Schedule A is to break it up into three sections, which we’ll cover.
Important note about this report
This report runs based on data in OnPay. If you did not run payroll with OnPay in 2019, we may not be able to run calculations for both lookback periods. If this is the case for you, we recommend consulting an accountant or financial advisor when applying for loan forgiveness.
What we’ll cover
- Payroll Cost from the Covered Period
- What does Full Time Equivalent mean?
- Using FTE calculations
- Covered Period, lookback period and FTE comparison
- Wage Reductions Calculation
The information from the Schedule A is used to fill out the PPP Loan Forgiveness Calculation Form on page 1 of SBA Form 3508. This guide will walk you through filling out the PPP Loan Forgiveness Calculation Form using information from your OnPay PPP Loan Forgiveness Report. Learn how to run this report in OnPay→
Payroll Costs from the Covered Period
Use the subtotal from column D of employees who earned less than $100K in 2019
Lines 2, 3, 5, 11, 12, and 13
For lines 2 and 3, you’ll need the Average FTE (Box 2) and the Salary/Hourly Wage Reduction (Box 3) from PPP Schedule A Worksheet, Table 1. Similarly, for line 5 and lines 11-13, it's easier to skip these for now. Don't worry, we’ll cover where to find these totals later in this article.
Use the subtotal from column D of employees who earned $100K or more in 2019
Use the grand total of employer contributions for employee health insurance from column F
Note: If your employer contributions are not set up in OnPay, you will need to get this information from your insurance policy provider.
Use the grand total of employer contributions for employee retirement plans from column G
Note: If your employer contributions are not set up in OnPay, you will need to get this information from your retirement plan provider.
Use the grand total of employer state and local taxes from column E
OnPay does not track any owner-employee or owner compensation separately from regular W-2 employee data. You will need to calculate the amount paid to everyone in this category and enter the total here.
Add lines 1, 4, 6, 7, 8, 9 together to calculate your Payroll Costs.
Once you’ve calculated your Payroll Costs (line 10), enter the total on Line 1 of the PPP Loan Forgiveness Calculation Form (Page 1 of SBA Form 3508).
FTE (Full-Time Equivalent) Calculations
What does Full-Time Equivalent mean?
The Full-Time Equivalent, or FTE, represents an employee's scheduled hours divided by the employer's hours for a full-time workweek. For example, with a 40-hour workweek, employees who work 10 hours will be 0.25 FTEs, 20 hours will be 0.5 FTEs, and 40 hours will be 1.0 FTEs.
Using FTE calculations
Review the FTE comparison chart towards the bottom of the report.
The report will recommend an option based on the lookback period and calculation method with the highest number in the right column. If it is a “1” or higher, there was no reduction in the number of FTEs in the covered period.
Tip: Make note of the highest number’s color and "Option" number. It’ll come in handy later.
Covered period, lookback period, and FTE comparison
The numbers from the covered period, lookback period, and FTE comparison chart should be used for PPP Schedule A, Lines 2, 5, 11, 12, and 13 (covered below).
Select the subtotal (in red) for employees under 100K from either Column L or M, based on the FTE calculation method with the highest ratio on the FTE comparison chart, as determined in the previous step. We'll cover Line 3 when we get to Wage Reduction Calculation.
Select the subtotal (in red) for employees over 100K from either Column L or M, based on the FTE calculation method with the highest ratio on the FTE comparison chart, as determined in the previous step.
Use either the total number from Column U or X...
...or Column V or Y based on the FTE calculation method & lookback period you chose from the FTE comparison chart.
Add Lines 2 & 5. The total should match the grand total from Column L or M.
Divide Line 12 by Line 11. The total should match the number you selected from the FTE Comparison chart. If the result is less than 1.0, enter it on Line 13. If the result is 1.0 or higher, enter 1.0. Do not enter a number greater than 1.0 on Line 13.
The final number you have on Line 13 from the PPP Schedule A should then be entered on Line 7 of the PPP Loan Forgiveness Calculation Form (Page 1).
About FTE Reduction Safe Harbor #1 and #2
If your company meets the requirements of either the FTE Reduction Safe Harbor #1, or the FTE Reduction Safe Harbor #2, you can:
- Check the applicable box on the PPP Schedule A
- Enter 1.0 on line 13 of the PPP Schedule A
- Enter 1.0 on line 7 of the PPP Loan Forgiveness Calculation Form
The OnPay Loan Forgiveness report does not account for the safe harbor exemptions. All employers should evaluate if their company meets the safe harbor exemption requirements prior to completing their loan forgiveness application.
Wage Reduction Calculation (Line 3)
The potential loan forgiveness calculation is used to determine whether your loan forgiveness amount must be reduced.
Employees Earning at Least 75% of Previous Wages
If your employees earned at least 75% of their previous wage, your loan forgiveness will not be reduced and Column S will be blank. If your company did not reduce wages, check the box and enter “0” on Line 3.
Employee Salary and Wages Reduced by More than 25%
However, if employee salary and wages are reduced by more than 25%, then your loan forgiveness will also be reduced. If column S is not blank, enter the subtotal of employees under 100K (in green) on Line 3 of the PPP Schedule A.
Learn more about how OnPay calculates wage reduction.
About FTE/Wage Reduction Safe Harbor
The FTE/Wage reduction Safe Harbor exempts certain borrowers from the loan forgiveness reduction based on FTE employee levels. Specifically, as the Borrower, you are exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met:
- You reduced FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and
- You then restored its FTE employee levels by not later than December 31, 2020, to the FTE employee levels in the pay period that included February 15, 2020.
Note: The OnPay Loan Forgiveness Report report does not account for the Safe Harbor exemptions. All employers should evaluate if their company meets the safe harbor exemption requirements prior to completing their loan forgiveness application.