We’re here for you. See what we’re building for small businesses at gusto.com/covid-19. To download W-2s or 1099s, sign into your account.
We’re here for small businesses. For W-2s or 1099s, sign in.

×

How can we help?

Paycheck Protection Program Report

We've created a report called the Paycheck Protection Program (PPP) report to help you apply for a PPP loan. You can access this report through both the COVID-19 and Reports tab of your Gusto account.

The U.S. Treasury has changed its guidance for how to implement the Paycheck Protection Program (“PPP”)  multiple times since the original guidance was issued and we expect them to continue to do so. We are updating this page with changes as they happen. The latest Treasury guidance was published around 7pm PST on April 14, 2020. Reports generated after 2pm PST on April 7 are still accurate and new reports do not need to be created for your company as a result of the latest guidance.

April 15, 2020 Update: The Treasury published updated guidance regarding partnerships. While partners may not submit a separate PPP loan application for themselves as a self-employed individual, self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed for the partnership. Rent, mortgage interest, utilities, and other debt service are generally incurred at the partnership level, not partner level, so the PPP program will now provide the funds for these expenses to the partnership, not individual partners. Treasury also reminded partnerships and other businesses that participation in the PPP may affect your eligibility for state-administered unemployment compensation or CARES Act Employee Retention Credits.

Helpful Resources

What did you change in your newest report? Which one should I use?

Around 7pm PST on April 6th, the U.S. Treasury published new guidelines for calculating payroll costs. Gusto’s PPP report reflecting these changes will be available after about 2pm PST on April 7th. This includes removing employer-paid federal employment taxes from Payroll Costs as well as removing owner’s draw as compensation from Gross Payroll for any entity other than sole proprietorships. We’d recommend that you use our most up-to-date report for your PPP loan application as it is consistent with those new guidelines.

Why did you change your methodology again?

This situation is incredibly fluid and we are reacting in real-time to changing guidance. We want to ensure that our customers are submitting applications that will get approved by their lender.

What do I do if I already gave my lender my PPP report?

Check in with your lender. Note that if you used the April 6th version of the report your loan amount will be higher than the report logic we will publish after 2pm PST on April 7th. Seventy-five percent of your loan proceeds must go to approved Payroll Costs or the amount of your loan forgiveness will be reduced and you may have to pay back the remaining costs with a fixed interest rate of 1.00%. If your lender requests a report reflecting the new guidance, simply sign in to Gusto and download the new report after 2pm PST.

What period of time should I use to determine my average monthly payroll costs?

Employers will need to select a pay period in order to determine average monthly payroll costs.

  • Seasonal businesses that have their highest monthly payroll during a specific period of the calendar year should choose March 1, 2019 - June 30, 2019. You can also set your start date as February 15, 2019, but this may cause your pay period to include an additional month which, in turn, may decrease your average Monthly Payroll Cost for the purpose of the PPP loan calculation.
    • Seasonal businesses (as defined above) that were in business for at least eight weeks between Feb 15, 2019 - June 30, 2019 but weren’t back in business by Feb 15, 2020, don’t count as a “new business” and should select the above period for seasonal businesses.
  • Newly formed businesses (i.e., any company that wasn’t in business and paying employees by February 15, 2019) should select a period of January 1, 2020 - February 29, 2020.
  • Regular businesses that don’t fall into either category above can either select the 2019-calendar year (e.g., Jan 1 - Dec 31, 2019) or the 1-year period prior to today's date (e.g., April 1, 2019 - March 31, 2020). We’ve defaulted to calendar year 2019, in accordance with the latest Treasury guidance. We’re aware of inconsistent guidance on what look-back period should be used, so you can customize it based on your CPA or PPP lender requirements.
    • We recommend you use full months in your selection. Setting your start or end-date as mid-month may cause your pay period to include an additional month which, in turn, may decrease your average Monthly Payroll Cost for the purpose of the PPP loan calculation.
    • Note: If you switched to Gusto anytime during the report period and didn't enter your historical payrolls, you will only be able to pull payroll data from Gusto for the time after you switched. You will need to compile this data with payroll data from your prior provider.

How did you calculate my average monthly payroll costs?

  1. Step One: Calculate “Gross Payroll” in a given month. This is the total dollar amount you paid to or on behalf of full-time and part-time employees. This includes:
    • Salary, wages, commissions, tips, and bonuses, including severance pay.
    • Owner’s Draw compensation only if the employer is a sole proprietorship.
    • Any paid leave paid out during the time period (no FFCRA paid leave).
    • Employee-paid state and local taxes. 
    • Employee-paid Group Health Benefits contributions.
    • Employee-paid Retirement contributions.
    • Federal taxes paid by your employees, which includes:
      • FIT (Federal Income Tax);
      • Employee-share of FICA (Social Security & Medicare)
  2. Step Two: Apply the $100k salary cap for highly compensated employees and sole proprietors
    • When calculating a PPP loan amount, you can’t include any annualized, employee compensation (including owner’s draws for sole proprietors) that is in excess of $100k(for purposes of this calculation, we’ll refer to this rule as the “salary cap” and to those who hit it as “highly compensated employees”). 
    • Gusto has implemented the salary cap by counting all Earnings of highly compensated employees each month until each highly compensated employee has received $100k in annualized pay. Once they’ve received $100k in Earnings, we won’t include any Earnings for that employee for the remainder of the year. 
      • Ex: If a highly compensated employee receives $100k by April of each year, you’ll see a drop in Earnings in the PPP Report starting in April or May and for the remainder of the look back period.
  3. Step Three: Add employer-paid state and local taxes, retirement contributions, and employer-paid benefits contributions to find each month’s Monthly Payroll Cost
    • Add employer-paid state and local taxes. 
    • Add employer-paid benefits contributions for group health plans, dental and vision plans, and health FSAs. (This does not include HSAs, Group Term Life Plans, or Long-Term and Short-Term Disability Plans). 
    • Add employer-paid retirement contributions.
    • You now have your Monthly Payroll Cost for a given month!
  4. Step Four: Calculate your Average Monthly Payroll Cost.
    • Find the sum of all your Monthly Payroll Costs in the given period and divide that sum by the number of months in the lookback period to determine the Average Monthly Payroll Cost (e.g. if your lookback period is 2019, divide your sum total of Monthly Payroll Costs by 12 to find your Average Monthly Payroll Cost).

What costs are not eligible as Payroll Costs?

  • Contractor Pay
  • Payroll Reimbursements 
  • Owner’s draw compensation (except for sole proprietors) 
  • Workers’ Compensation fees
  • Fringe benefits (e.g., Commuter Benefits, HSAs)
  • Ancillary benefits (e.g., Short-Term Disability, Long-Term Disability, Life Insurance)

Am I eligible to apply for a PPP loan? 

Most active small businesses with under 500 employees should be eligible. According to Interim Final Rule, the base requirements for eligibility are that they’ve (i) been in operation on Feb 15th; (2) either had employees for whom they paid salaries and payroll taxes or paid independent contractors (as reported on a Form 1099-MISC) as of Feb 15; and (3) employ less than 500 employees. However, companies in certain industries may be ineligible, despite the above. These additional eligibility requirements mostly mirror the SBA 7(a) borrower requirements. Ineligible businesses may include:

  • Financial services businesses and lenders
  • Businesses that have defaulted on SBA or other federal loans in the past
  • Businesses whose owners (including partial owners) are currently indicted or arraigned, or (b) on parole for a criminal charge; or (c) were convicted of a felony within the last five years 
  • Businesses dealing in cannabis or are otherwise illegal at the federal level
  • Businesses that engage in a pyramid scheme
  • Household employers (e.g., employ household employees such as nannies or housekeepers)
  • Venture-backed companies that are deemed to have more than 500 affiliated employees due (read Treasury’s guidance for how affiliation is determined here).

April 6, 2020: The Treasury recently published new guidance for faith-based organizations seeking PPP loans. While the requirements for SBA 7(a) borrowers normally excluded faith-based organizations from eligibility, the Treasury has chosen to allow faith-based organizations to apply for a PPP loan. The Treasury will also be proposing amendments to those regulations so that they conform to the Constitution. You can read more at the SBA Interim Final Rules on Affiliation.

What other forms may I need to provide?

While each bank or lender will have their own process, some documents and/or tax filings that your lender might request are listed below.

Available in Gusto:

Documents and/or tax filing that your lender may request

Where you can find it in Gusto

Statements listing eligible payroll costs during the applicable look back period.

Your PPP Payroll report in-app within the COVID-19 and Reports tabs in your Gusto account.

IRS Form 941

used by employers to report quarterly wages, and federal employment taxes 

For 2019: For historical quarters that were filed by Gusto, you will find copies of your 941 (and any amended/corrected 941s) under the Documents tab in your Gusto account. 

 

For First Quarter 2020: Form 941s aren’t due to be filed until April 30. We’ve provided a draft IRS Form 941 that you can attach to your PPP loan application. You can find it under the Documents Tab in your Gusto account.

IRS Form 940

used to report annual Federal Unemployment Tax Act (FUTA) tax.

If Gusto filed your 2019 annual filings, you will find a copy of your IRS Form 940 under the Documents tab in your Gusto account. 

 

Note: Your 2020 Form 940 isn’t due to be filed until January 31, 2021.

IRS Form 944

Employer’s Annual Federal Tax Return, used by qualifying small employers (those whose annual liability for federal withholding is $1,000 or less) to file and pay taxes once per year.

If Gusto filed your 2019 annual filings, and you qualify to file the annual Form 944 instead of the quarterly Form 941, you will find a copy of your IRS Form 944 under the Documents tab in your Gusto account. 

 

Note: Your 2020 Form 944 isn’t due to be filed until January 31, 2021. Also, if an annual Form 944 was filed for your business, you are not required to file a quarterly Form 941.

IRS Form 1099-MISC

Miscellaneous Income, used to report payments made in the course of a trade or business to a person who’s not an employee. 

For companies that paid contractors: If Gusto filed your 2019 annual filings you will find a copy of the 1099-MISC forms issued to your contractors under Documents, on the Company tab in your Gusto account. 

 

For contractors of Gusto customers: If Gusto filed your 2019 information returns to the IRS, you will find a copy of your 1099-MISC forms under Documents in your Gusto account. If you haven’t set up your profile in Gusto, please contact the company directly for a copy of your 1099-MISC. 

IRS Form W-3

“Transmittal of Wage and Tax Statements” used by customers to send information about employee wages.

If Gusto filed your 2019 annual filings you will find a copy of the W-2 and W-3 forms under Documents, on the Company tab in your Gusto account. Scroll to page 2, or beneath the cover page, and Form W-3 will be available.

NOT available in Gusto

Business information such as your legal name, primary business address, business Employer Identification Number, etc.

While these are not technically available on Gusto, you can go to your Gusto dashboard under the Documents tab, click Company and pull up your Direct Deposit Authorization document. You can use this as a source to complete most of that information.

Suggested documents for Sole Proprietors 

To expedite the process, we recommend having ready your:

  • net income reported on your Schedule C (line 31) of your 2019 personal income tax return. If you haven’t filed your 2019 tax returns, a prepared Schedule C that has not yet been filed yet should be sufficient. If you have not prepared a 2019 Schedule C, it is recommended that your lender accept your filed 2018 1040 Schedule C. 
  • proof of healthcare and retirement benefits costs
  • documentation of self-employed status in 2019 such as a 2019 Form 1099-MISC (box 7), invoice, bank statement or other documentation of self-employed status as of Feb. 15, 2020, such as an invoice or bank statement. 
  • If you have employees, provide your Paycheck Protection Program report for the period including Feb. 15, 2020.
  • Information regarding any Economic Injury Disaster Loans (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance and any advances under an EIDL COVID-19 loan (because it does not have to be repaid). 
Suggested documents for Partnerships and LLCs filing taxes as a partnership Your self employment income can be located on each partners’ Schedule K-1, or Line 14 of Form 1065 (Schedule K) for 2019.

Any guidance or information we've provided for the purposes of applying for a loan under the Small Business Administration's Paycheck Protection Program ("PPP") is for informational purposes only. Our guidance is based on Treasury Guidance as published on April 14th, which may become outdated.

Payroll, benefits, HR and more.