Loan forgiveness is as it sounds. The entire amount of the loan was forgiven. Many people were confused about the process. It could have been called a disaster fund or similar that was allocated to applicants to help them through the crisis. Instead, it was marketed as a loan that was to be forgiven in the future, which was kind of a strange way to implement the whole thing.
The criteria for loan forgiveness is that essentially the business really needs the money in order to maintain employees. The loan is forgiven as small business owners can pay for essential employees. This helps both employees and business owners, which can keep the engine of the economy running. The SBA is reviewing certain applications and may decide that certain businesses do not meet minimum eligibility criteria.
The most direct way to get payroll information is through a high-quality payment processor such as Intuit QuickBooks or FreshBooks. These applications help you to swiftly calculate all costs per employee and are often integrated with accounting and/or timekeeping software.
The result is that you can get payroll information at the click of a button, quite easily. You can observe and update IRS forms through these platforms, and some systems will even automatically file taxes and other key forms automatically for you. Other advantages include:
- Capability to work out payroll calculations/deductions quicker.
- Capability to generate accurate payslips.
- Capability to calculate bonuses, expenses, holiday pay, etc with minimum effort.
- Capability to send returns to HMRC and print P45, P60, and other forms for employees.
- Capability to automate certain tasks, including year-end reporting.
- Reduces the complexity of compliance.
- Removes the need to understand complex tax legislation.
While you can calculate PPP and other payroll costs manually, it makes a lot more sense to invest in a high-quality accounting or payroll software that does it for you. Many of them integrated PPP compliant applications to assist in easy payroll calculation specifically for this exact loan.
Calculating payroll costs for the PPP is a lot easier than it sounds at the outset. You simply calculate all monthly wages (and contribution) for employees, divide by 12, and multiply by 2.5 to get your total PPP Payroll eligibility.
For a Sole Proprietorship without employees, leave out the employees, and just calculate your yearly net profit, divide by 12, and multiply by 2.5 for PPP payroll eligibility. The process is similar for all legal entity types. Consult the table above for more details.
The PPP process is now over. But you can still feel free to contact a reputable online lender for a swift online loan. We recommend OnDeck, Kabbage, PayPal LoanBuilder, Lending Club, and SmartBiz as the best means of online finance for small businesses.
Are There Viable Alternatives to the PPP?
The PPP program is now over. Pandemic Employment Assistance and the Employee Payroll Tax Retention program. Online lenders provide a variety of term loans, business lines of credit, invoice factoring, and even SBA (7)(a) processing. There was also a huge number of grant programs available to the PPP at the time, which were not taken up by as many business owners as was potentially possible.
Can’t I Just Use an Online PPP Loan Calculator?
Yes, there are many online PPP calculators. But they do not really cut down on the time to calculate payroll all that much. You simply need to calculate your total net wages of employees (or profit) for the self-employed with no employees, divide by 12, and multiply by 2.5. It is actually an easy calculation once you have the yearly totals. You still need to calculate these figures yourself with the right forms or using the right payroll platform.