This Section is one of five sections, labeled Section A to Section E, that have been created to assist you in completing the initial PPP application on this site. Please use the navigation buttons at the bottom. If you need to update an existing application, or check your status, please click on the green button at the bottom of the Update / Status menu tab at the top.
Please do not start multiple applications - it delays the process!
Section C – Basic Calculation of the Loan Amount
This Section C discusses the basic calculation behind the eligible loan about and applies both to employers with W-2 employees and to self-employed persons. The differences between these two types of loan applicants is discussed in more detail in Sections B and D.
The amount of the loan available under the Paycheck Protection Program is 2.5 times the “average monthly payroll” (“AMP”) for the measurement period. Generally, the measurement period is 2019, but can be other periods under special circumstances – see the SBA online resources or consult an accounting or legal advisor for more information.
While up to 40% of the PPP loan proceeds can be spent on certain expenses other than payroll, these other expenses are not used to calculate the amount of the eligible loan.
Several types of expenses can be counted in allowable “payroll expenses” including direct gross payroll to employees (including the amount of employees payroll tax deducted from the gross wages), and health and other benefits paid by the busines for the benefit of the employee. If there are questions about what you can include in payroll expenses, please consult the online SBA resources that are available or an accounting or legal professional.
For each category of average monthly payroll expenses, supporting documentation must be provided, as explained in the instructions for the Documents Page in Section B.
The law creating PPP limits the amount of gross compensation for an individual to $100,000 per year, prorated. This is $8,333 per month in the AMP. The calculations for excluding the payroll over $100,000 annually are included in the application and the supporting documentation must be uploaded.
If there are no other employer paid expenses included in the AMP calculation, the maximum loan attributable to an individual with gross compensation of $100,000 or more is $20,833 ($8,333 X 2.5). If the company spent another $20,000 annually per employee on the other allowable benefits, this adds $1,667 per month to the AMP or $4,167 to the loan, for a total loan of approximately $25,000 per highly compensated employee.
This calculation also applies to a self-employed person making more than $100,000 annually.
Note that the following EIDL loan amount can be added to the total loan amount and may increase the total allowable above the approximate $25,000 discussed in this section:
Outstanding EIDL, Net of Advance (if Applicable): The outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).