I faced this problem on my own 2020 tax return and the easiest way for me it was: to add the P.P.P. loan forgiveness amount back to California income by reporting it as other addition on 100-S Page-1 Line-7 and make the adjustment necessary on  CA Sch M-1.

I intended to not decrease the payroll expenses by the forgiveness amount because it was already reported to the state and I did not want to create any confusion.