SBA Paycheck Protection Program (PPP) Loan Calculator

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SBA Paycheck Protection Program (PPP) Loans and How to Calculate Them

The Paycheck Protection Program (PPP), established under The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), provides a financial lifeline for small businesses in the wake of the COVID-19 pandemic. 

PPP loans will give a vast swath of small businesses the financial safety net they need to survive the economic downturn caused by the spread of the novel coronavirus, and it will be available to a broad number of American small businesses. 

After initially lapsing on August 8, 2020, the program was revitalized for 2021 as a part of the $900 billion stimulus package. 

But let’s be real—the calculations for PPP can feel complicated, so we made it as easy as we could to calculate your potential PPP loan amount because we know the last thing small business owners need to do right now is pour over legislation trying to make sense of it. 

SBA Paycheck Protection Program (PPP) Loan Amounts

Borrowers can qualify for First and Second Draws on a PPP loan. For a First Draw, a borrower can qualify for a loan up to 2.5 times average monthly payroll costs. If you received a PPP loan during a previous round and need additional funding, you can apply for a Second Draw.

Businesses in food service, accommodations, and other qualifying industries (you need a NAICS code starting with “72”) may qualify for a Second Draw worth up to 3.5 times your monthly payroll costs. All other eligible industries may qualify for a Second Draw amount up to 2.5 times monthly payroll costs.

PPP loans for First and Second Draws will be capped following PPP maximums which are:

  • Maximum aggregate amount for First and Second Draws: $10 million/business
  • Maximum loan amount for a Second Draw: $2 million/business (less if it will put you over the $10 million aggregate total)
  • Maximum total amount for businesses within a corporate group: $20 million

SBA Loan Calculations: Understanding the Math in PPP Loans

What will the SBA use to calculate? Because the small business landscape has changed so drastically since the beginning of February, that depends on how long your business has been open, whether it’s seasonal, and if you’ve taken out an EIDL. 

SBA Loan Calculations for Businesses in Operation from February 15, 2019, to June 30, 2019

For these businesses and nonprofits, the maximum First Draw loan size will be 2.5 times the average monthly payroll costs during the 12-month period prior to the loan being made. 

SBA Loan Calculations for Businesses Not in Operation from February 15, 2019, to June 30, 2019

In this case, the maximum First Draw loan amount is set at 2.5 times the average monthly payroll costs between January 1, 2020, and February 29, 2020.

SBA Loan Calculations for Seasonal Businesses

For seasonal businesses, the SBA will use the average monthly payroll costs between February 1, 2019, and June 30, 2019, or March 1, 2019, and June 30, 2019. 

Additional Funds May Be Available on a Second Draw for Qualifying Borrowers

Businesses with a NAICS code beginning “72” may qualify for up to 3.5 times their monthly payroll costs on their Second Draw. 

What’s Included in Calculating SBA Paycheck Protection Program (PPP) Loans

Once you’ve qualified for an SBA loan under the Paycheck Protection Program (PPP), the amount of your PPP loan will be calculated using payroll costs including:

  • Compensation: Salary, wages, commission/similar compensation, cash tips/equivalent are all included here
  • Paid time off: Vacation pay and parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Healthcare costs: payments required for group healthcare benefits, including insurance premiums
  • Retirement benefit payments
  • State and local taxes associated with the compensation of employees

What’s Not Included in SBA PPP Loan Calculations

The following are excluded from PPP calculations: 

  • Annual employee or owner compensation over $100,000 ($8,333/month)
  • Taxes imposed or withheld under Chapters 21, 22, and 24 of the IRS Code
  • Employee compensation for individuals whose principal place of residence is outside the US
  • Qualified sick and family leave for which you can receive a credit under the Families First Coronavirus Response Act

SBA Paycheck Protection Program (PPP) Loan Interest Rates

SBA PPP loans have a 1.0% fixed rate APR for the life of the loan.

SBA Paycheck Protection Program (PPP) Loan Terms

The maximum term for SBA PPP loans is 5 years. 

SBA Paycheck Protection Program (PPP) Loan Forgiveness

Funds used to cover certain payroll-related costs in the first 24 weeks of the loan, starting at the origination date, are eligible to be forgiven. 

Paycheck Protection Program Payments

(Say that heading fast 10 times.) One of the highlights of PPP loans for cashed strapped businesses is that payments are deferred for the first 10 months. 

Paycheck Protection Program (PPP) Loans and Other SBA Loans

You can qualify for a PPP loan in addition to other SBA loans you may have already applied or qualified for, like an SBA Economic Injury and Disaster Loan (EIDL) or an SBA 7(a) loan, but the funds cannot be for the same intended use as another SBA loan. If you used an EIDL for payroll purposes and receive a PPP loan, the EIDL must be refinanced into the PPP. 

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