The Paycheck Protection Program and Forgiveness Calculations

The treasury and the SBA have left a lot of questions about the CARES Act unanswered. What expenditures will be covered by the PPP and how do we calculate the amount that will be forgiven? For starters, we need to calculate the average full-time equivalent employees. A full-time equivalent employee is an employee who works an average of at least thirty hours per week. For employees who work part-time, we need to add them together, divide by thirty, and that will give you the full-time equivalent. You will need that information when you start to do the forgiveness calculations.

First, you must determine the full-time equivalent employees for the eight week period following your initial loan disbursement. In my opinion, that period starts when you actually receive the funds in your bank account. Second, you must calculate the full-time equivalents from February 15, 2019, to June 30, 2019. Third, you must determine the full-time equivalents from January 1, 2020, to February 29, 2020.


  1. Eight Week Average FTE = Sum of Part-Time Employees / 30
  2. Eight Week Average FTE / Feb 15 – June 30, 2019, Calculation
  3. Eight Week Average FTE / Jan 1 – Feb 29, 2020, Calculation

75% of the loan must be spent on payroll to prevent your employees’ wages from decreasing by more than 25% for the loan to be forgiven. Between equations two and three, pick the equation that results in a number greater than one and your forgiveness won’t be reduced. In this week’s solocast, we walk through some examples of these equations and talk about the other types of expenditures that are covered by the PPP. As always, please visit me at for more informative, money-saving podcast episodes like this one.

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