PPP Loan Calculator: How Much Can My Business Get?

With the Paycheck Protection Program (PPP) back in action, you may be wondering how much money your business is eligible for. Although determining the amount may seem complicated, it’s actually rather straightforward when you follow our 4 basic steps. We’ve created the easy-to-use guide below to help you calculate the maximum PPP loan amount that your business may potentially be eligible for.

First Draw

It’s important to acknowledge that PPP was primarily designed to incentivize business owners to keep their employees on payroll. The SBA explains, “First Draw PPP Loans can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations”.

For First Draw PPP loans, meaning those applicants who are taking a PPP loan for the first time, the maximum loan amount is 2.5 times the average monthly payroll for 2019 up to $10 million.

Second Draw

The maximum loan amount for Second Draw PPP loans is 2.5 times the average monthly payroll costs for 2019 or 2020 up to $2 million. Businesses with a NAICS code beginning in 72 (generally hospitality businesses) may receive up to 3.5 times the average monthly payroll costs.

Before you apply for a Second Draw PPP loan, you’ll need to verify that you can show at least a 25% drop in quarterly revenue in either Q1, Q2, or Q3 of 2020 compared to the same quarter in 2019.

How to Calculate if You Have a 25% Drop in Quarterly Revenue to Qualify for a Second Draw PPP Loan

• Compare your business’s gross receipts for any quarter in 2020 to the same quarter in 2019. According to the SBA’s definition, “Gross receipts includes all revenue in whatever form received or accrued (in accordance with the entity’s accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. Generally, receipts are considered “total income” (or in the case of a sole proprietorship “gross income”) plus “cost of goods sold” and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms.”

• Determine if you have a 25% drop in revenue.

• If you weren’t in business in 2019, but were in business prior to February 15, 2020, you can use the gross receipts from Q2, Q3, or Q4 of 2020 and compare it to Q1 of 2020 to determine if you have a 25% drop in revenue.

• If you have a seasonal business, you can use the numbers from February 15, 2019 to June 30, 2019.

For most businesses (self-employed businesses and a few other entity types have slightly different guidelines), here are the 4 steps to calculating your maximum loan amount.  

→ Step 1: Calculate your total annual payroll costs. (First Draw loans will use 2019 payroll costs. Second Draw PPP loans will be able to use 2019, 2020, or the 12 months preceding the date of application to calculate average payroll costs in determining a maximum loan amount.) Included in payroll costs are:

• Salary, wages, commissions or similar compensation, and cash tips (Note: you cannot include any compensation in excess of $100,000 per employee.)
• Payment for retirement benefits
• Allowance for dismissal or separation
• Payment for time off for vacation, family leave, and medical leave
• Payment of state and local tax associated with the compensation of employees.
• Costs for group healthcare benefits such as vision, dental insurance, or disability

→ Step 2: Divide your total payroll costs from Step 1 by the number 12 to calculate your average monthly payroll costs.

→ Step 3: Multiply your average monthly payroll costs (from Step 2) by 2.5.

→ Step 4: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020. Do not include the amount of any EIDL advance that you received. (EIDL advances are forgivable and do not need to be repaid or included in these calculations.)

Example of PPP Loan Calculation:

1.            Total payroll for 2019 is: $600,000.

2.            Monthly payroll is: $50,000 (calculated by taking $600,000 and dividing by 12)

3.            Average monthly payroll times 2.5 is: $125,000 (calculated by multiplying $50,000 x 2.5)

4.            No EIDL, therefore amount is $125,000.

Still have questions?

We’ve got answers! Our COVID-19 Resource Center has up-to-date information and helpful tips for business owners like this guide to PPP FAQs and this PPP Application Checklist.