Editor’s note: Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the latest guidance from SBA and Treasury to confirm current program rules and how they apply to your particular situation.
Under the Paycheck Protection Program (PPP), small business owners can apply for approximately 2.5x their average qualified monthly payroll expenses, up to $10 million, to be used for eligible payroll costs and other certain operating costs, including rent, mortgage interest, and utilities. The loans are intended to keep employees on payroll and keep small businesses and other eligible organizations in operation.
Additionally, PPP loans may be forgivable, in whole or in part, if certain requirements are met. Business owners using PPP funds to maintain payroll and cover certain operating expenses may not be required to repay their loans if they meet certain criteria. Among others, these criteria include
- Using at least 60% of the funds to cover eligible payroll expenses.
- Maintaining the same number of employees on the payroll and rehiring employees who were previously laid off before December 31, 2020, or before the date you submit your loan forgiveness application, whichever comes first.
- Maintaining employee salaries and wages and restoring salaries and wages by December 31, 2020, or before the date you submit your loan forgiveness application, whichever comes first.
Borrowers seeking loan forgiveness for PPP loans can apply for forgiveness through their lenders. They’ll need to verify the number of employees on the payroll and their pay rates during the loan forgiveness covered period after their loan was disbursed.
Creating a payroll report may help verify these numbers and expedite the auditing process.
What should I include in a PPP payroll report?
When creating a PPP payroll report, you should include eligible payroll costs, including:
- Employee cash compensation, including salaries, wages, commissions, or similar compensation that don’t exceed $100,000 per year.
- Payment of cash tips or equivalent.
- Paid parental, family, medical, or sick leave not covered by the Families First Coronavirus Response Act (FFCRA).
- Paid time off.
- Group healthcare benefits and insurance premiums.
- Retirement contributions.
- Certain state and local taxes assessed on compensation.
You should not include the following ineligible costs in your PPP payroll report:
- Any employee’s income over $100,000 per year.
- Compensation for employees who live outside the U.S.
- Qualified sick leave under the FFCRA.
- The employer’s share of certain payroll taxes
- Contractor and vendor payments.
For a comprehensive list of eligible costs, visit SBA.gov.
Creating a PPP payroll report using payroll or accounting software
Most payroll and accounting solutions make it easy to create and run various payroll reports. Simply set a date range, select the employees you want to include in your report, and generate the report.
Some accounting solutions will allow you to customize what’s included in the report. Most payroll summary reports include gross pay, adjusted gross pay, net pay, and employer taxes and contributions for each employee. Use the list of eligible payroll costs to customize the payroll report to your needs.
Print or export your report to Excel to share with your lender. Don’t forget to bring additional payroll documentation that you may need to apply for loan forgiveness. These documents include, but may not be limited to:
- The number of employees on payroll.
- Employee pay rates.
- Payroll tax filings.
- Payroll costs paid in the eight weeks following disbursement of the loan.
- Payment receipts, cancelled checks, or account statements showing employer contributions to employee health insurance and retirement plans.
- Mortgage interest payments in the eight weeks following disbursement of the loan.
- Rent or lease payments in the eight weeks following disbursement of the loan.
- Business utility payments in the eight weeks following disbursement of the loan.
- Any advance received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act EIDL Emergency Grant program
For a full list of required information and documentation, see the PPP Loan Forgiveness Application.
Creating a PPP payroll report in Excel
If you run payroll manually, you might create a payroll report in Excel. It may be easiest to begin by looking for a payroll report template online or within Excel. Remember, accuracy is pivotal when it comes to applying for PPP loan forgiveness. If you’re unsure of your numbers, it’s always a good idea to check with an accountant or financial adviser and work with your lender.
- Do contractor payments count in my average payroll costs for the calculation of my PPP loan request?
- Use reports to apply for a PPP loan
- Get the correct payroll report to help you apply for a loan under the Paycheck Protection Program
- How to organize payroll for SBA loan forgiveness
PPP loan and forgiveness calculations and eligibility may vary. Refer to the SBA.gov for information about your particular situation. The uses listed above are ones that may be covered by loan forgiveness and are not the only allowable uses of a PPP loan.
The average number of full-time equivalent employees is determined by calculating the average number of full-time equivalent employees for each pay period falling within a month.
Regulations and guidance from the SBA and the U.S. Department of the Treasury on the PPP are evolving rapidly and the above information may be outdated. Please refer to the latest guidance from SBA and Treasury to confirm current program rules and how they apply to your particular situation.The funding described is made available to businesses located in the United States of America and are not available in other locations.
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