How to Calculate Your Paycheck Protection Program Loan

The Paycheck Protection Program provides grant-like SBA small business loans, incentivizing owners to keep workers employed. If you use 60% of the loan on payroll costs and the remainder on mortgage interest payments, rent and lease payments, and utilities—this loan is eligible for complete forgiveness. Read up on how the program works here.

How much money you’ll get under PPP

You can qualify for up to $10 million or 2.5 times your payroll costs, whichever amount is lower. To calculate your payroll costs as a small business, you’ll need to use the step-by-step business loan calculator provided by the SBA.

To calculate your PPP loan, you’ll need to consider the average monthly cost of employee salaries, including your own. The calculation is different for sole proprietors, whose business’ net profit determines the loan amount (Line Item 31 on a Schedule C).

How to calculate PPP payroll costs by business entity type

Type of BusinessCalculated payrollOther payroll costs you can include
1099 contractorThe sum of your income earned through freelance work, as reported on your Schedule C – line 31 (max $100,000).None.
Sole proprietorYour 2019 net profit (max $100,000) as reported on your Schedule C (line 31).U.S. annual employee salaries, including wages, commissions, tips, and state and local payroll taxes. Each employee is capped at $100,000 annually.
PartnershipYour 2019 self-employment earnings. If you have a 2019 tax return, this is reported on your Schedule K-1 (line 14), then multiplied by 0.9235. You may include K-1 earnings as salary for each partner, up to $100,000.U.S. annual employee salaries, including wages, commissions, tips, and state and local payroll taxes. Each employee is capped at $100,000 annually.
S corpYour salary as reported through a payroll service (max $100,000). Your salary may only be considered if it was paid through payroll while remitting payroll tax.U.S. annual employee salaries, including wages, commissions, tips, and state and local payroll taxes. Each employee is capped at $100,000 annually.
C corpYour salary as reported through a payroll service (max $100,000). As a C corp, your salary may only be considered if it was paid through payroll while remitting payroll tax.U.S. annual employee salaries, including wages, commissions, tips, and state and local payroll taxes. Each employee is capped at $100,000 annually.

Source: Bench Accounting

Considerations for PPP small business loans

After you have a general sense of how much loan you’ll qualify for and how to calculate your payroll costs, make sure to consider the following:

  • Collect the required documents for your PPP loan application
  • Remember you need to spend at least 60% of your loan funds on payroll expenses
  • Know that self-employed, independent contractor, and sole proprietorship persons are eligible to apply for SBA’s Paycheck Protection Program, as long as you were in operation on 2/15/2020

We understand this is a difficult time for everyone, and we’re committed to helping business owners with government emergency relief resources and clear steps.

BlueVine is an official direct non-bank lender for the government-backed SBA Paycheck Protection Program. Our entire PPP application process, including retrieving your loan number, is automated and online. Get started with a fast and secure online PPP loan application.

Disclaimer

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