Updated August 17, 2020
What we'll cover
- About the report
- What's required?
- What if something's different than expected?
- OnPay Calculation Methods
- Copy of PPP Loan Forgiveness Application
- SBA Loan Forgiveness Application EZ
- SBA Loan Forgiveness Application-EZ Instructions
- What small business owners need to know about PPP loan forgiveness
The OnPay PPP Loan Forgiveness report is designed to assist with completing the PPP Loan Forgiveness Application. The report is subtotaled in two sections to align with Schedule A and the Schedule A worksheet:
- Employees who were hired in 2020 OR earned less than $100,000 in 2019
- Employees who earned over $100,000 in 2019
Note: If your company was not with OnPay in 2019, all employees will show under section 1.
The report is divided into four color-coded sections across the top.
Blue: Payroll cost and FTE information from the 8-week or 24-week Covered Period
Purple: Wage comparison data from the lookback period (1/1/2020-3/31/2020) and potential loan forgiveness reduction information
Green: Full-Time Equivalent lookback period data for calculation Option 1 (2/15/2019 - 6/30/2019)
Orange: Full-Time Equivalent lookback period data for calculation Option 2 (1/01/2020 - 2/29/2020)
Frequently Asked Questions
About the report
Does OnPay provide a printable report to include with my PPP Loan Forgiveness application?
To provide employers with the most detailed and flexible information we designed the report to be downloadable. The report can be printed, however many lenders are also accepting electronic documents and we suggest submitting the report as an excel document if possible.
Can I edit/delete columns from your report?
The amounts in the light blue columns can be edited without unlocking the report. To edit other columns or delete columns from the report, you must unlock the document. To unlock, click the review tab in excel, then select “unprotect”. The password is the client's OnPay Company ID (CID is located on line 3 of the PPP Loan Forgiveness report.)
Do I have to use your PPP Loan Forgiveness Report?
No, while our report is useful, you are more than welcome to use your own report or put your payroll numbers in our report.
When must a borrower apply for loan forgiveness or start making payments on a loan?
A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan – including before the end of the covered period – if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness.
If the borrower applies for forgiveness before the end of the covered period and has reduced any employee’s salaries or wages in excess of 25 percent, the borrower must account for the excess salary reduction for the full 8-week or 24-week covered period, as described in Part III.5.
If the borrower does not apply for loan forgiveness within 10 months after the last day of the covered period, or if SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred, and the borrower must begin paying principal and interest. If this occurs, the lender must notify the borrower of the date the first payment is due. The lender must report that the loan is no longer deferred to SBA on the next monthly SBA Form 1502 report filed by the lender.
I didn’t lay off any employees or reduce their salaries, do I still need to complete the Loan Forgiveness application?
Yes. You must complete the Application in order to be forgiven. However, you may be able to fill out the PPP Loan Forgiveness Application Form 3508EZ form. If you’re not sure which form to complete, review the instructions for the 3508EZ to see if you qualify for the form, you can also verify with your accountant.
If an employee declines the rehire offer, does it count for the payroll forgiveness reduction amount or just the employee count or both?
If the employee decides not to return to work, it would only count for the Average FTE comparison calculation. The salary/wage reduction applies only to the reduced salaries or wages of employees who are still employed.
To ensure that borrowers are not doubly penalized, the salary/wage reduction applies only to the portion of the decline in employee salary and wages that is not attributable to the FTE reduction.
What about employees that took a voluntary layoff or furlough? We tried to keep them working, but they didn’t want to work because of fear of COVID-19.
See instructions on FTE Reduction Exceptions on page 5 of the PPP loan instructions. If this position was not filled, it is possible to receive an exemption and include an additional FTE based on the average number of hours worked and Covered Period chosen to use.
How do I know if my business qualifies for the Safe Harbor exemption?
The OnPay Loan Forgiveness Report report does not account for the Safe Harbor exemptions. All employers should evaluate whether their company meets the safe harbor exemption requirements prior to completing their loan forgiveness application.
My company previously laid off an employee, but later offered to rehire the employee. If the employee declined the rehire offer, will my PPP loan forgiveness amount still be reduced?
Loan forgiveness will not be reduced based on an inability to rehire employees if the employer can document either:
- Written offers to rehire individuals who were employees of the organization on February 15, 2020; OR
- An inability to hire similarly qualified employees for unfilled positions by December 31, 2020
What if something's different than expected?
What is the difference between covered period and Alternative Payroll Covered Period on the application?
Covered period starts on the day in which the money hits your bank account. The Alternative Payroll Covered Period is the first payroll after you receive the money. Employers who pay weekly or bi-weekly can only use the Alternative Payroll covered period.
For companies who have a weekly and semi-monthly payroll register, which pay period would the Alternative Payroll Covered Period be based on?
Since semi-monthly is not eligible for the Alternative Payroll Covered Period, you would have to use the original Covered Period.
Are these specific people or positions potentially held by two different people if someone resigned?
If someone resigned voluntarily, and you replaced this person, you can only count the replacement person from that point forward in your Average FTE calculation. No double-dipping is allowed.
What if your standard hours for all full time employees are 35 not 40. All would be considered PT?
The loan application instructions define an FTE on page 5 as an employee working 40 hours or more. In this situation, each employee would count as 0.9 if you choose this option; otherwise, under the simpler approach, your employee would count as 0.5. Please note the comparable lookback periods calculate an FTE in the same way so if the employees hours were not reduced there should be no impact on the number of FTEs.
I have some hourly employees that didn’t return to work. How do I count for them?
In this case, the employees do not count towards wage reduction, they would only count towards the FTE reduction calculation.
How will the determination of whether my business has maintained staffing levels be made?
The average number of FTEs during the Covered Period or Alternative Payroll Covered Period will be compared to one of two time periods. You may either use the period from February 15 through June 30, 2019 or January 1 through February 29, 2020.
OnPay Calculation Methods
How does OnPay calculate the payroll costs in the covered period?
The report calculates payrolls costs incurred within the relevant 8 week or 24 week period. Pay runs that cover days within or outside the 8 week or 24 week window will be prorated by the number of days within the pay period. (blue section - column C - column H)
The employee earned $500 over the two-week period from 3/29 to 4/11, but the "Covered Period" began on 4/10. This means that only two days of this pay period should be included in the relevant PPP Loan report. Prorated payroll costs are determined by calculating the daily rate. Because two days fall in the covered period, OnPay calculates 2 x $35.71= $71.43
- Pay Period: 3/29/20 — 4/11/2020
- Period Gross Pay: $500
- Total number of days in the pay period: 14
- Calculate daily rate: $500/14 = $35.71
- Covered Period begins: 4/10/2020
- Number of days in the covered period: 2
- Calculate covered payroll cost: 2 x $35.71= $71.43
Note: If you have not processed all payrolls within the relevant period, this report could be incomplete.
How does OnPay calculate the potential forgiveness reduction amount (column S)?
For hourly employees, the reduction in their hourly rate is multiplied by their average weekly hours from Quarter 1 of 2020 and then multiplied by 8 or 24, depending on the length of the covered period. For salaried employees, the reduction in their average annual salary is multiplied by 8 or 24, depending on the length of the covered period.
Hourly employee calculation method
- Multiply the rate from the lookback period (column P) by 0.75
- Subtract the average hourly rate from the covered period (column J) from the result in step 1.
- Divide the total hours from the lookback period (column Q) by 13 to determine the average number of hours worked per week between 1/1/2020-3/31/2020.
- Multiply the amount result of step 2 by the result of step 3.
- Multiply the result of step 4 by the number of weeks in the covered period ( either 8 or 24)
The amount calculated in step 5 is your potential wage reduction for the hourly employee.
Salaried Employee Calculation Method
- Multiply the average annual salary from the lookback period (column O) by 0.75.
- Take the average annual salary from the covered period (column I) and subtract it from the result in step 1.
- Multiply the result of step 2 by the number of weeks in the covered period (either 8 or 24).
- Divide the result of step 3 by 52 weeks.
The amount calculated in step 4 is your potential wage reduction for the salary employee.
The FTE/Wage reduction safe harbor exempts certain borrowers from the loan forgiveness reduction based on FTE employee levels. Specifically, the Borrower is exempt from the reduction in loan forgiveness based on FTE employees described above if both of the following conditions are met:
- The Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and ending April 26, 2020; and
- The Borrower then restored its FTE employee levels by not later than June 30, 2020 to its FTE employee levels in the Borrower’s pay period that included February 15, 2020.
The OnPay 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.
When calculating the amount of loan forgiveness, how will the determination of whether my business has maintained pay levels be made?
Employers will be required to repay part of the loan if an employee’s average annual salary or average hourly rate are reduced by 25% or more during the Covered Period or Alternative Payroll Covered Period compared to the period of January 1 through March 31, 2020.
Please note that as COVID-19 legislation is changed or extended, always refer to IRS guidance for the most up-to-date information.