This Document Includes Loan Forgiveness Examples to Help Business Owners Like You Complete the Pre-Work Required to Request Forgiveness

PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES

This document includes Loan Forgiveness examples to help business owners like you complete the pre-work required to request Forgiveness. These examples illustrate how to calculate your loan Forgiveness amount.

Click on the examples in the chart below to review the calculations required. While all of the specifics may not fit your business, the examples should help you.

Before starting your Forgiveness request online through Chase, you’ll want to use your own costs to complete the calculations for your business.

We hope these examples give you confidence in navigating Form 3508EZ.

FORM 3508EZ FORM 3508EZ FORM 3508EZ

EXAMPLE 1 EXAMPLE 2 EXAMPLE 3 ABC Cookies A&A IT Finn’s Consulting Sporting Goods

Business type Self-employed, Limited Liability Limited Liability Sole Proprietor Company (LLC) Company (LLC) or Single-member Limited Liability Company (LLC)

Employees None Yes Yes

Types of costs Payroll and Payroll only Payroll and non-payroll non-payroll

IMPORTANT NOTE: For informational purposes only: Examples described may not be appropriate for every business, and do not take the place of legal, tax or accounting advice for your situation. You should carefully consider your needs and objectives before making any decisions, and consult the appropriate professional(s). This information is dated 11/04/2020 and is subject to change. For the most recent details, visit SBA.gov and Treasury.gov.

PRE-WORK EXAMPLE 1 ABC Cookies

ABC Cookies received $20,833.00 in a PPP loan on Business type May 4, 2020, and spent the funds across an 8-week SELF-EMPLOYED Covered Period, which ended on June 29. SCHEDULE C SOLE PROPRIETOR Because ABC Cookies is a Schedule C Sole Proprietorship Employees and can check Box 1 on Form 3508EZ Instructions, NONE it can use the SBA Form 3508EZ.

Covered Period We’ll show how this business calculated its Loan 8 WEEKS Forgiveness amount. We’ll walk you through ABC Cookies’ SBA Form as well as additional calculations it needs to Eligible payroll costs YES make along the way.

You’ll want to complete the steps below for your own Eligible non-payroll costs business before starting your Forgiveness request YES online through Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind SBA Form used 3508EZ that Chase’s online request closely mirrors the SBA Form you choose.

Chase for Business | Loan Forgiveness pre-work examples 2 STEP 1 Calculate payroll costs

On Line 1, ABC Cookies enters the payroll costs incurred or paid during the Covered Period. NOTE Your incurred or paid There are caps on the salaries for owner employees making more than $100,000.00. payroll costs could be If your business is using the 8-week Covered Period (as ABC Cookies is), owner more than your PPP loan amount. That’s OK. compensation is capped at $15,385.00. If using the 24-week Covered Period, owner compensation is capped at $20,833.00.

While completing the request online, remember to click on all the dropdown arrows to view important information such as “eligible payroll costs and instructions.” We TIP If your calculated created the dropdowns to help you along the way. Because ABC Cookies is a Sole payroll costs on Proprietorship and has no employees, it uses only owner compensation as cash Line 1, including Salary/ compensation for employees, and employee benefits are not eligible for Forgiveness. Hourly Wage Reduction and FTE information (if ABC Cookies only has one owner who makes more than $100,000.00 annually, so it applicable), are equal enters $15,385.00 (the capped amount) on Line 1. to or greater than your PPP loan amount, you LINE 1. Payroll Costs = $15,385.00 can request Forgiveness for your full PPP loan without submitting Because ABC Cookies does not have employees and its payroll costs are lower than your non-payroll costs. its loan amount, it will move on to Lines 2–4. Keep in mind: Once we submit your Forgiveness request to the SBA, STEP 2 you might not be able Calculate non-payroll costs (Lines 2 through 4) to submit additional supporting payroll or Eligible non-payroll costs include business mortgage interest payments, business non-payroll costs or rent or lease payments and business utility payments. Your business must have taken documents in support of your request. on these obligations before Feb. 15, 2020.

On Lines 2 through 4, enter the eligible costs paid or incurred during your Covered Period.

For ABC Cookies:

LINE 2. Business mortgage interest payments: $0.00 Line 3. Business rent or lease payments: $7,000.00 Line 4. Business utility payments: $3,000.00

Total non-payroll costs: $10,000.00

Chase for Business | Loan Forgiveness pre-work examples 3 STEP 3 Potential Forgiveness amounts

Chase will pre-populate Lines 5 through 7.

For ABC Cookies:

LINE 5. The sum of Lines 1 through 4: $25,385.00

LINE 6. PPP loan amount: $20,833.00

Using the SBA’s formula, Line 7 is calculated by dividing your payroll costs (Line 1) by 0.60. If Line 7 is equal to or greater than Line 6 (your PPP loan amount), you’ve spent at least 60% of your loan on payroll costs.

For ABC Cookies:

LINE 7. Payroll cost calculation: $25,641.67

Line 7 ($25,641.67) is greater than Line 6 ($20,833.00), so ABC Cookies spent at least 60% of its loan on payroll costs.

STEP 4 Your Forgiveness amount

We’ll pre-populate Line 8.

Line 8 will be the lowest of Lines 5, 6 or 7.

For ABC Cookies:

LINE 8. Forgiveness amount: $20,833.00

TIP If your Forgiveness amount requested is less than your loan amount and you think you still have time to use the extra funds, you may want to consider submitting your request later.

Chase for Business | Loan Forgiveness pre-work examples 4 PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES

PRE-WORK EXAMPLE 2 A&A IT Consulting

A&A IT Consulting received $100,962.00 in a PPP loan on June 22, 2020 and used the funds across 19 weeks. It is ready Business type LIMITED LIABILITY to request Forgiveness before the end of its Covered Period. COMPANY (LLC) A&A is structured as a Limited Liability Company Employees with employees. All of its employees earn under YES $100,000.00 annually.

Covered Period A&A can use the SBA Form 3508EZ because it can check 24 WEEKS Box 2 on Form 3508EZ Instructions and had no reduction Eligible payroll costs in employees, employee hours or employee salaries/ YES hourly wages.

Eligible non-payroll We’ll show how this business calculated its Loan costs Forgiveness amount. We’ll walk you through A&A’s SBA NO Form as well as additional calculations it needs to make SBA Form used along the way. 3508EZ You’ll want to complete these steps for your own business before starting your Forgiveness request online through Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind that Chase’s online request closely mirrors the SBA Form you choose.

Chase for Business | Loan Forgiveness pre-work examples 5 NOTE STEP 1 There are caps on salaries for Calculate payroll costs employees making more than $100,000.00. If your business On Line 1, A&A will enter the payroll costs it incurred or paid during the is using the 24-week Covered Period, eligible individual salaries Covered Period. are capped at $46,154.00. If The SBA salary caps are based on an 8-week or 24-week Covered Period using the 8-week Covered Period, eligible individual salaries are depending on when you received your funds. However, if your business, capped at $15,385.00. like A&A’s, spent your loan funds in less time, you calculate the salary cap based on the number of weeks during which you spent the funds. Owner compensation is capped at $20,833.00 for 24 weeks and For example, if an employee made over $100,000.00 annually, you would $15,385.00 for 8 weeks. calculate their salary cap by dividing $100,000.00 by 52 weeks, then multiplying by the number of weeks the money was spent. In this case, it was 19 weeks. NOTE $100,000.00 ÷ 52 = $1,923.08 $1,923.08 x 19 = $36,538.46 While completing the Chase request online, remember to Because A&A Consulting has employees, it will include: click on all the dropdown arrows • Employee cash compensation to view important information such as “eligible payroll costs • Employee benefits like health insurance and retirement plans and instructions.” We created • Employer state and local taxes paid by the business and assessed on the dropdowns to help you along employee compensation the way. • Owner compensation

To calculate how much it has spent on employee cash compensation, A&A will use Table 1 from the Schedule A Worksheet found in SBA Form 3508.

To submit its request, A&A will use Form 3508EZ.

Step 1-A A&A fills inColumns 1 and 2 for all employees who are paid less than or equal to $100,000.00 annually. The Employee Identifier inColumn 2 is the last 4 digits of each employee’s Social Security number.

Example SBA Form 3508, Table 1, Schedule A Worksheet:

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Kimberly 1234 Jay 5678 Elsie 9101 Rafael 1121 Xavier 3141 Hideko 5161 Sam 7181 FTE Reduction Exceptions: Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 6 Step 1-B A&A then calculates payroll costs at an annualized rate during the Covered Period in Column 3. This takes some extra work because the calculations aren’t included on the SBA Table 1. To help you, we’ve created a sample worksheet.

Chase sample worksheet 1 (not included in the SBA instructions):

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6 ACTUAL CASH NUMBER OF WEEKS ANNUALIZED SALARY COMPENSATION A&A EMPLOYEE ANNUAL SALARIES WEEKLY SALARIES A&A IS REQUESTING DURING THE 19 WEEKS INCURRED OR PAID FORGIVENESS FOR DURING THE 19 WEEKS Kimberly $ 60,000.00 $ 1,153.85 19 $ 21,923.15 $ 18,000.00 Jay $ 65,000.00 $ 1,250.00 19 $ 23,750.00 $ 21,000.00 Elsie $ 80,000.00 $ 1,538.46 19 $ 29,230.74 $ 29,230.74 Rafael $ 78,000.00 $ 1,500.00 19 $ 28,500.00 $ 28,500.00 Xavier $ 87,000.00 $ 1,673.08 19 $ 31,788.52 $ 29,500.00 Hideko $ 88,000.00 $ 1,692.31 19 $ 32,153.89 $ 30,000.00 Sam $ 67,000.00 $ 1,288.46 19 $ 24,480.74 $ 20,000.00

Column 1: Employee names. If you need more rows for your business, add them. Column 2: Shows the annual salary of each employee. In this example, all A&A employees earn less than $100,000.00 annually. If you had employees who earned more than $100,000.00 annually, you would need to also fill out Table 2 in the Schedule A Worksheet in SBA Form 3508. For example: Column 3: Enter the weekly salaries for each employee by dividing Column 2 Kimberly’s annual salary of by 52 for the number of weeks in a year. $60,000.00 ÷ 52 = 1,153.85 Column 4: Enter 8 or 24 for the number of weeks during which you spent the funds, unless you spent the money faster. A&A spent all its funds in 19 weeks, so it enters 19. For example: Column 5: Calculate the annualized salary of each employee during the time in Kimberly’s weekly salary of which you spent the funds. A&A multiplies Column 3 by Column 4 to calculate what $1,153.85 x 19 = $21,923.15 each employee would have been paid during the 19 weeks at their normal rate. Column 6: In your payroll documents, locate the actual cash compensation you incurred or paid each employee and enter it in Column 6. A&A’s payroll documents show the amount it paid each employee during the 19 weeks. In this example, A&A kept Elsie and Rafael at their pre-PPP loan salary levels.

Take the numbers from Column 6 from the Chase worksheet and fill inColumn 3 “Cash Compensation” in SBA Table 1.

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued):

Column 1 Column 2 Column 3 Column 4 Column 5 Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Kimberly 1234 $ 18,000.00 Jay 5678 $ 21,000.00 Elsie 9101 $ 29,230.74 Rafael 1121 $ 28,500.00 Xavier 3141 $ 29,500.00 Hideko 5161 $ 30,000.00 Sam 7181 $ 20,000.00 FTE Reduction Exceptions: $ 176,230.74 Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 7 Step 1-C A&A calculates its average Full-Time Equivalency (FTE). NOTE The SBA has outlined two methods for To show how, we created another sample worksheet below for calculating FTE:

A&A’s employees. Each A&A employee worked 40 hours or more • Simplified Method: Assign 1.0 for employees each week during the Covered Period, so 1.0 is entered in Column 3 who worked 40 hours or more each week for each employee. and 0.5 for employees who worked fewer than 40 hours.

Chase sample worksheet 2 (not included in the SBA instructions): • Detailed Method: For each employee, enter the average number of hours paid per Each A&A employee worked 40 hours per week, and week, then divide by 40, and round the total the company elected to use the Simplified Method. to the nearest 10th. The maximum for each COLUMN 1 COLUMN 2 COLUMN 3 employee is 1.0.

EMPLOYEE HOURS WORKED SIMPLIFIED METHOD

Kimberly 40 1.0 Jay 40 1.0 Elsie 40 1.0 Rafael 40 1.0 Xavier 40 1.0 Hideko 40 1.0 Sam 40 1.0 AVERAGE FTE (BOX 2): 7.0

Step 1-D A&A now goes back to Payroll Table 1, Column 4 and enters a 1.0 next to each employee and 7.0 in Box 2 (see below).

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued)

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Kimberly 1234 $ 18,000.00 1.0 Jay 5678 $ 21,000.00 1.0 Elsie 9101 $ 29,230.74 1.0 Rafael 1121 $ 28,500.00 1.0 Xavier 3141 $ 29,500.00 1.0 Hideko 5161 $ 30,000.00 1.0 Sam 7181 $ 20,000.00 1.0 FTE Reduction Exceptions: $ 176,230.74 7.0 Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 8 Step 1-E TIP The SBA only requires businesses to include A&A calculates if it reduced any employee’s salary or hourly Wage Reduction totals for employees who make wages by more than 25% during the time the business spent $100,000.00 or less in annualized Covered Period salary. Follow steps 1a through 1c within the chart its funds. to determine an answer for your own business.

Chase sample worksheet 3 (not included in the SBA instructions):

STEP HOW MUCH DID YOUR KIMBERLY JAY ELSIE RAFAEL XAVIER HIDEKO SAM 1 BUSINESS REDUCE WAGES?

Enter average annual salary or hourly 1a wage during Covered Period or $18,000.00 $21,000.00 $29,230.74 $28,500.00 $29,500.00 $30,000.00 $20,000.00 Alternative Payroll Covered Period

Enter average annual salary or 1b hourly wage between Jan. 1, 2020, $21,923.15 $23,750.00 $29,230.74 $28,500.00 $31,788.52 $32,153.89 $24,480.74 and March 31, 2020

1c Divide the value entered in 1a by 1b 82% 88% 100% 100% 93% 93% 82%

If 1c is 0.75 or more, enter zero in the column above Box 3 for that employee; otherwise proceed to Step 2

NOTE: If your business chose the 24-week Covered Period, 1b would be a reference period 24 weeks prior to obtaining your loan

For each A&A employee, divide 1a by 1b. In this example, no employee who makes $100,000 or less was reduced by more than 25%. Therefore, A&A can skip Steps 2 and 3 in the SBA Schedule A Worksheet.

Step 1-F A&A goes back to the SBA Form and enters a ”0” for each employee in Column 5 “Salary/Hourly Wage Reduction.”

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued):

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Kimberly 1234 $ 18,000.00 1.0 0 Jay 5678 $ 21,000.00 1.0 0 Elsie 9101 $ 29,230.74 1.0 0 Rafael 1121 $ 28,500.00 1.0 0 Xavier 3141 $ 29,500.00 1.0 0 Hideko 5161 $ 30,000.00 1.0 0 Sam 7181 $ 20,000.00 1.0 0 FTE Reduction Exceptions: $ 176,230.74 7.0 0 Totals: Box 1 Box 2 Box 3

NOTE If A&A paid any employees $100,000.00 or more annually, it would have filled out Columns 1 through 4 of Table 2 in the Schedule A Worksheet, using the same calculation methodology and recognizing the caps on compensation during the 8- or 24-week Covered Period. There is no Salary/Hourly Wage Reduction column on Table 2 because the SBA does not factor in reductions of employees who are paid $100,000.00 or more.

Chase for Business | Loan Forgiveness pre-work examples 9 Step 1-G Now A&A can fill out SBA Form 3508EZ. It starts by calculating thetotal Cash Compensation for its employees (Column 3 on Payroll Table 1) during the 19 weeks of the Covered Period. A&A also will include any employee benefits and owner compensation. We’ve outlined those below:

Cash Compensation: $176,230.74

Employee benefits:$10,000.00 Gather this information from your payroll documentation for the weeks you spent your funds.

Owner compensation: $16,492.79 This is the 19-week cap for compensation for an owner who is paid $100,000.00 or more annually. For example: The calculation: Divide the owner compensation cap of $20,833.00 $20,833.00 ÷ 24 = $868.04 by 24 weeks — because A&A is using a 24-week Covered Period — and $868.04 x 19 = $16,492.76 multiply that by 19 for the number of weeks A&A spent their funds.

A&A totals the above (Cash Compensation + Employee Benefits + Owner Compensation) and enters it on Line 1. NOTE Your incurred or paid payroll LINE 1. Payroll Costs: $202,723.53 costs could be more than your loan amount. That is OK.

NOTE If your calculated payroll costs in Line 1, including Salary/Hourly Wage Reduction and FTE information (if applicable), are equal to or greater than your PPP loan amount, you can request Forgiveness for your full PPP loan without submitting your non-payroll costs.

Step 1-H If your payroll costs including Salary/Hourly Wage Reduction and FTE information are equal or greater than your PPP loan amount, Chase will present you with this option.

Based on the payroll, Salary/Hourly Wage Reduction and FTE information you entered, you can request Forgiveness for the full PPP loan amount without entering your non-payroll costs. Would you like to proceed using payroll costs only? If you answer “yes,” please skip Lines 2 through 4. Any information previously entered on Keep in mind: Once we submit your Forgiveness these lines will be removed if you choose “yes.” request to the SBA, you might not be able to submit Because A&A has entered payroll costs greater than its loan amount, it already additional supporting qualifies for consideration of full Forgiveness and does NOT need to submit any payroll or non-payroll costs non-payroll costs. A&A would check “yes” below. or documents in support of your request. Yes

Chase for Business | Loan Forgiveness pre-work examples 10 STEP 2 Calculate non-payroll costs (Lines 2 through 4)

Eligible non-payroll costs include business mortgage interest payments, business rent or lease payments and business utility payments. Your business must have taken on these obligations before Feb. 15, 2020.

On Lines 2 through 4, enter the eligible costs paid or incurred during your Covered Period.

For A&A IT Consulting:

LINE 2. Business mortgage interest payments: Skipped

LINE 3. Business rent or lease payments: Skipped

LINE 4. Business utilities payments: Skipped

STEP 3 Potential Forgiveness amounts

Chase will pre-populate Lines 5 through 7 for you when you submit your online Forgiveness request.

For A&A IT Consulting:

LINE 5. The sum of Lines 1 through 4: $202,723.53

LINE 6. PPP loan amount $100,962.00

For A&A IT Consulting: Using the SBA’s formula, Line 7 is calculated by dividing your payroll costs (Line 1) by 0.60. If Line 7 is equal to or LINE 7. Payroll cost 60% requirement $337,872.55 greater than Line 6 (your PPP loan amount), you’ve spent at least 60% of your loan on payroll costs. Line 7 ($337,872.55) is greater than Line 6 ($100,962.00), so A&A IT Consulting has spent at least 60% of its loan on payroll costs.

STEP 4 Your Forgiveness amount

We’ll pre-populate Line 8.

Line 8 will be the lowest of Lines 5, 6 or 7.

For A&A IT Consulting:

LINE 8. Forgiveness amount $100,962.00

TIP If your Forgiveness amount requested is less than your loan amount and you think you still have time to use the extra funds, you may want to consider submitting your request later.

Chase for Business | Loan Forgiveness pre-work examples 11 PAYCHECK PROTECTION PROGRAM (PPP) LOAN FORGIVENESS PRE-WORK EXAMPLES

PRE-WORK EXAMPLE 3 Finn’s Sporting Goods

Finn’s Sporting Goods received $89,615.00 in a PPP loan on August 3, 2020, and spent the funds across an 8-week Business type LIMITED LIABILITY Covered Period. It is ready to request Forgiveness. COMPANY (LLC) It is structured as a Limited Liability Company with Employees employees. All of its employees earn under $100,000.00 YES annually. Finn’s reduced two employees’ salaries, but

Covered Period not by more than 25%. 8 WEEKS Finn’s Sporting Goods can use SBA Form 3508EZ because Eligible payroll costs it satisfies Boxes 2 and 3 on theForm 3508EZ Instructions YES regarding reduction in employee annual salary, hourly wages, number of employees and average paid hours and Eligible non-payroll costs was unable to operate during the Covered Period at the YES same level of business activity as before Feb. 15, 2020.

SBA Form used We’ll show how this business calculated its Loan 3508EZ Forgiveness amount. We’ll walk you through Finn’s SBA Form as well as additional calculations it needs to make along the way.

You’ll want to complete these steps for your own business before starting your Forgiveness request online though Chase. When you’re ready, you’ll use this pre-work for your Chase online request. Keep in mind that Chase’s online request closely mirrors the SBA Form you choose.

Chase for Business | Loan Forgiveness pre-work examples 12 STEP 1 Calculate payroll costs NOTE • There are caps on salaries On Line 1, Finn’s Sporting Goods will enter the payroll costs it incurred or paid for employees making more during the Covered Period. than $100,000.00. If using the 8-week Covered Period, Because Finn’s Sporting Goods has employees, it will include: eligible individual salaries are capped at $15,385.00. • Employee cash compensation If your business is using the • Employee benefits like health insurance and retirement plans 24-week Covered Period, eligible individual salaries • Employer state and local taxes paid by the business and assessed are capped at $46,154.00. on employee compensation • Owner compensation is capped at $15,385.00 for • Owner compensation 8 weeks and $20,833.00 for 24 weeks. To calculate how much it has spent on employee cash compensation, Finn’s • Your incurred or paid payroll will use Table 1 from the Schedule A Worksheet found in SBA Form 3508. costs could be more than your To submit its request, Finn’s will use Form 3508EZ. loan amount. That is OK. • While completing the Chase request online, remember Step 1-A to click on all the dropdown arrows to view important Finn’s fills inColumns 1 and 2 for all employees who are paid less than or information such as “eligible equal to $100,000.00 annually. The Employee Identifier inColumn 2 is the payroll costs and instructions.” We created the dropdowns to last 4 digits of each employee’s Social Security number. help you along the way.

Example SBA Form 3508, Table 1, Schedule A Worksheet:

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Lee 1234 Kye 5678 Esme 9101 Antonio 1121 Ahmed 3141 Ashley 5161 Sofia 7181 FTE Reduction Exceptions: Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 13 Step 1-B Finn’s then calculates Cash Compensation at an annualized rate during the Covered Period in Column 3. This takes some extra work because the calculations aren’t included on the SBA Table 1. To help you, we’ve created a sample worksheet.

Chase sample worksheet 1 (not included in the SBA instructions):

COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5 COLUMN 6 NUMBER OF ACTUAL CASH WEEKS FINN’S ANNUALIZED SALARY COMPENSATION FINN’S EMPLOYEE ANNUAL SALARIES WEEKLY SALARIES IS REQUESTING DURING THE 8 WEEKS INCURRED OR PAID FORGIVENESS FOR DURING THE 8 WEEKS Lee $ 65,000.00 $ 1,250.00 8 $ 10,000.00 $ 8,000.00 Kye $ 84,000.00 $ 1,615.38 8 $ 12,923.04 $ 10,000.00 Esme $ 48,000.00 $ 923.08 8 $ 7,384.64 $ 7,384.64 Antonio $ 58,000.00 $ 1,115.38 8 $ 8,923.04 $ 8,923.04 Ahmed $ 60,000.00 $ 1,153.85 8 $ 9,230.80 $ 8,700.00 Ashley $ 79,000.00 $ 1,519.23 8 $ 12,153.84 $ 11,000.00 Sofia $ 72,000.00 $ 1,384.62 8 $ 11,076.96 $ 10,500.00

Column 1: Employee names. If you need more rows for your business, add them. Column 2: Shows the annual salary of each employee. In this example, all Finn’s employees earn less than $100,000.00 annually. If you had employees who earned more than $100,000.00 annually, you would also need to fill out Table 2 in the Schedule A Worksheet in SBA Form 3508. Column 3: Enter the weekly salaries for each employee by dividing Column 2 by 52 for the number of weeks in a year. Column 4: Enter 8 or 24 for the number of weeks during which you spent the funds, unless you spent the money faster, then enter that number. For example, 15. For example: Column 5: Calculate the annualized salary of each employee during the time in Lee’s weekly salary of which you spent the funds. Finn’s multiplies Column 3 by Column 4 to calculate $1,250.00 x 8 = $10,000.00 what each employee would have been paid during the 8-week Covered Period at their normal rate. Column 6: In your payroll documents, locate the actual cash compensation you incurred or paid each employee and enter it in Column 6. Finn’s payroll documents show the amount it paid each employee during the 8 weeks. In this example, Finn’s kept Esme and Antonio at their pre-PPP loan salary levels.

Take the numbers from Column 6 from the Chase worksheet and fill inColumn 3 “Cash Compensation” in SBA Table 1.

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued):

Column 1 Column 2 Column 3 Column 4 Column 5 Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Lee 1234 $ 8,000.00 Kye 5678 $ 10,000.00 Esme 9101 $ 7,384.64 Antonio 1121 $ 8,923.04 Ahmed 3141 $ 8,700.00 Ashley 5161 $ 11,000.00 Sofia 7181 $ 10,500.00 FTE Reduction Exceptions: $ 64,507.68 Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 14 Step 1-C Finn’s calculates its average Full-Time Equivalency (FTE). NOTE The SBA has outlined two methods for To show how, we created another sample worksheet below calculating FTE: for Finn’s employees. Each Finn’s employee worked 40 hours • Simplified Method: Assign 1.0 for employees or more each week during the Covered Period, so 1.0 is who worked 40 hours or more each week and entered in Column 3 for each employee. 0.5 for employees who worked fewer than 40 hours.

Chase sample worksheet 2 (not included in the SBA instructions): • Detailed Method: For each employee, enter the average number of hours paid per Each Finn’s Sporting Goods employee worked 40 hours per week, week, then divide by 40, and round the total and the company elected to use the Simplified Method. to the nearest 10th. The maximum for each COLUMN 1 COLUMN 2 COLUMN 3 employee is 1.0.

EMPLOYEE HOURS WORKED SIMPLIFIED METHOD

Lee 40 1.0 Kye 40 1.0 Esme 40 1.0 Antonio 40 1.0 Ahmed 40 1.0 Ashley 40 1.0 Sofia 40 1.0 AVERAGE FTE (BOX 2): 7.0

Step 1-D Finn’s now goes back to Payroll Table 1, Column 4 and enters a 1.0 next to each employee and a 7.0 in Box 2 (see below).

Example SBA Form 3508, Schedule A Worksheet, Table 1 (continued)

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Lee 1234 $ 8,000.00 1.0 Kye 5678 $ 10,000.00 1.0 Esme 9101 $ 7,384.64 1.0 Antonio 1121 $ 8,923.04 1.0 Ahmed 3141 $ 8,700.00 1.0 Ashley 5161 $ 11,000.00 1.0 Sofia 7181 $ 10,500.00 1.0 FTE Reduction Exceptions: $ 64,507.68 7.0 Totals: Box 1 Box 2 Box 3

Chase for Business | Loan Forgiveness pre-work examples 15 Step 1-E TIP The SBA only requires businesses to include Finn’s calculates if it reduced any employee’s salary or hourly Wage Reduction totals for employees who make wages by more than 25% during the time the business spent $100,000.00 or less in annualized Covered Period its funds. salary. Follow steps 1a through 1c within the below chart to determine an answer for your own business. Chase sample worksheet 3 (not included in the SBA instructions):

STEP HOW MUCH DID YOUR LEE KYE ESME ANTONIO AHMED ASHLEY SOFIA 1 BUSINESS REDUCE WAGES?

Enter average annual salary or hourly 1a wage during Covered Period or $8,000.00 $10,000.00 $7,384.64 $8,923.04 $8,700.00 $11,000.00 $10,500.00 Alternative Payroll Covered Period

Enter average annual salary or 1b hourly wage between Jan. 1, 2020, $10,000.00 $12,923.04 $7,384.64 $8,923.04 $9,230.80 $12,153.84 $11,076.96 and March 31, 2020

1c Divide the value entered in 1a by 1b 80% 77% 100% 100% 94% 91% 95%

If 1c is 0.75 or more, enter zero in the column above Box 3 for that employee; otherwise proceed to Step 2

NOTE: If your business chose the 24-week Covered Period, 1b would be a reference period 24 weeks prior to obtaining your loan

For each employee, divide 1a by 1b. In this example, no employee who makes $100,000.00 or less was reduced by more than 25%. Therefore, Finn’s can skip Steps 2 and 3 in the SBA Schedule A Worksheet.

Step 1-F Finn’s goes back to the SBA Form and enters a ”0” for each employee in Column 5 “Salary/Hourly Wage Reduction.”

Example SBA Form 3508, Table 1, Schedule A Worksheet (continued):

Column 1 Column 2 Column 3 Column 4 Column 5

Employee Salary/Hourly Wage Employee’s Name Identifier Cash Compensation Average FTE Reduction Lee 1234 $ 8,000.00 1.0 0 Kye 5678 $ 10,000.00 1.0 0 Esme 9101 $ 7,384.64 1.0 0 Antonio 1121 $ 8,923.04 1.0 0 Ahmed 3141 $ 8,700.00 1.0 0 Ashley 5161 $ 11,000.00 1.0 0 Sofia 7181 $ 10,500.00 1.0 0 FTE Reduction Exceptions: $ 64,507.68 7.0 0 Totals: Box 1 Box 2 Box 3

NOTE If Finn’s paid any employees $100,000.00 or more annually, it would have filled out Columns 1 through 4 of Table 2 in the Schedule A Worksheet, using the same calculation methodology and recognizing the caps on cash compensation during the 8- or 24-week Covered Period. There is no Salary/Hourly Wage Reduction column on Table 2 because the SBA does not factor in reductions of employees who are paid more than $100,000.00.

Chase for Business | Loan Forgiveness pre-work examples 16 Step 1-G Now Finn’s can fill out SBA Form 3508EZ. It starts by calculating thetotal cash compensation for its employees (Column 3 on Payroll Table 1) during the 8-week Covered Period. Finn’s also will include any employee benefits and owner compensation. We’ve outlined those below:

Cash Compensation: $64,507.68

Employee Benefits:$5,000.00 Gather this information from your payroll documentation for the weeks you spent your funds.

Owner Compensation: $15,385.00 This is the 8-week cap for an owner who is paid $100,000.00 or more annually. Finn’s totals the above (Cash Compensation + Employee Benefits TIP + Owner Compensation) and enters it on Line 1. If your calculated payroll costs on Line 1, including Salary/Hourly Wage LINE 1. Payroll Costs: $84,892.68 Reduction and FTE information (if applicable), are equal to or greater than your PPP loan amount, you can STEP 2 request Forgiveness for your full PPP loan without submitting your non- Calculate non-payroll costs (Lines 2 through 4) payroll costs.

Eligible non-payroll costs include business mortgage interest payments, Keep in mind: Once we submit your Forgiveness request to the SBA, you business rent or lease payments and business utility payments. Your might not be able to submit additional business must have taken on these obligations before Feb. 15, 2020. supporting payroll or non-payroll On Lines 2 through 4, enter the eligible costs paid or incurred during your costs or documents in support of your request. Covered Period.

For Finn’s Sporting Goods:

LINE 2. Business mortgage interest payments: $0.00

LINE 3. Business rent or lease payments: $5,500.00

LINE 4. Business utility payments: $3,000.00

TOTAL NON-PAYROLL COSTS = $8,500.00

Chase for Business | Loan Forgiveness pre-work examples 17 STEP 3 Potential Forgiveness amounts

Chase will pre-populate Lines 5 through 7 for you when you submit your online Forgiveness request.

For Finn’s Sporting Goods:

LINE 5. The sum of Lines 1 through 4: $93,392.68

LINE 6. PPP loan amount $89,615.00 Using the SBA’s formula, Line 7 is calculated by dividing your payroll costs (Line 1) by 0.60. If Line 7 is equal to or greater than Line 6 (your PPP loan amount), you’ve spent at least For Finn’s Sporting Goods: 60% of your loan on payroll costs. LINE 7. Payroll cost 60% requirement $141,487.80

Line 7 ($141,487.80) is greater than Line 6 ($89,615.00 total PPP loan amount), so Finn’s Sporting Goods has spent at least 60% of its loan on payroll costs.

STEP 4 Your Forgiveness amount

We’ll pre-populate Line 8.

Line 8 will be the lowest of Lines 5, 6 or 7.

For Finn’s Sporting Goods:

LINE 8. Forgiveness amount $89,615.00

TIP If your Forgiveness amount requested is less than your loan amount and you think you still have time to use the extra funds, you may want to consider submitting your request later.

Chase for Business | Loan Forgiveness pre-work examples 18