I have determined that I am eligible for the Paycheck Protection Program (PPP). How much can I borrow?
Under the Paycheck Protection Program (PPP), the maximum loan amount is the lesser of $10 million or an amount that you will calculate using a payroll-based formula specified in the CARES Act, as explained below.
How do I calculate the maximum amount I can borrow under the Paycheck Protection Program (PPP)?
The following methodology, which is one of the methodologies contained in the Act, will be most useful for many applicants.
- Step 1: Aggregate payroll costs (defined in detail below in f.) from the last twelve months for employees whose principal place of residence is the United States.
- Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
- Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
- Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
- Step 5: Add 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).
The examples below illustrate this methodology.
Example 1 – No employees make more than $100,000
- Annual payroll: $120,000
- Average monthly payroll: $10,000
- Multiply by 2.5 = $25,000
- Maximum loan amount is $25,000
Example 2 – Some employees make more than $100,000
- Annual payroll: $1,500,000
- Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
- Average monthly qualifying payroll: $100,000
- Multiply by 2.5 = $250,000
- Maximum loan amount is $250,000
Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000
- Annual payroll: $120,000
- Average monthly payroll: $10,000
- Multiply by 2.5 = $25,000
- Add EIDL loan of $10,000 = $35,000
- Maximum loan amount is $35,000
Example 4 – Some employees make more than $100,000, outstanding
- EIDL loan of $10,000
- Annual payroll: $1,500,000
- Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
- Average monthly qualifying payroll: $100,000
- Multiply by 2.5 = $250,000
- Add EIDL loan of $10,000 = $260,000
- Maximum loan amount is $260,000
Other Paycheck Protection Program (PPP) Resources:
For a top line overview of the program, click here.
If you’re a borrower, more information can be found here.
The application for borrowers can be found here.
