How PPP Loan is Calculated

The PPP loan is calculated using your average monthly payroll costs from the last year. Find out how to calculate your loan amount.

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What is PPP Loan?

The PPP loan is a government-backed loan designed to provide relief to small businesses during the COVID-19 pandemic. The loan is calculated based on your average monthly payroll expenses, and the maximum loan amount is 2.5 times your average monthly payroll expenses.

How PPP Loan is Calculated?

The Base Loan Amount

The base loan amount is calculated by taking the total cost of eligible non-payroll expenses and dividing it by 2.5.

Eligible non-payroll expenses include:

-Mortgage interest

To calculate the maximum loan amount, you will need to provide documentation of your eligible non-payroll expenses for the covered period.

The Forgiveness Amount

The forgiveness amount is determined by the number of full-time equivalent (FTE) employees you have during the covered period, as well as your payroll costs during that period.

To calculate your FTE employees, you will need to count all of your employees who work 40 hours or less per week. You will then need to divide that number by 2,000.

For example, if you have 10 employees who work 40 hours or less per week, your FTE count would be 5 (10/2,000 = 5).

Your payroll costs include salary, wages, tips, commissions, and other forms of compensation. Health benefits and retirement benefits can also be included in this calculation.

How to Apply for PPP Loan?

The Paycheck Protection Program (PPP) loan amount is based on 2.5 times your average monthly payroll costs from the last year. To apply for a PPP loan, you will need to fill out an application and submit it to your lender.


To be eligible for a PPP loan, you must:

– Be a small business, nonprofit organization, veterans organization, or tribal business concern with 500 or fewer employees, or a business that meets the size standard in its industry as provided by SBA

– Have used or will use the proceeds of the loan primarily for payroll costs, and have paid or will pay any payroll taxes due on those payroll costs.

– Have a principal place of residence in the United States

Application Process

There are four key steps in the PPP loan application process:
1. Get your documents in order
2. Choose a lender
3. Complete and submit your loan application
4. Wait for your lender to approve your loan

Applying for a PPP loan is not difficult, but it is important to make sure that you have all of the necessary documentation in order before you begin the process. The easiest way to do this is to gather all of the required information and put it into a single folder or directory. This will make it easy to find everything when you are ready to start the application process.

Once you have everything together, the next step is to choose a lender. You can apply for a PPP loan through any SBA-approved lender, including banks, credit unions, and online lenders. If you already have a relationship with a lending institution, that may be the best place to start your search. Otherwise, you can compare different lenders to find the one that best meets your needs.

Once you have chosen a lender, the next step is to complete and submit your loan application. The application will ask for basic information about your business, such as your business name and address, as well as information about your financial situation. You will also need to provide documentation supporting your claims, such as financial statements or tax returns.

After you have submitted your loan application, all you can do is wait for your lender to approve it. The SBA has set aside $349 billion for PPP loans, so there is no need to hurry; however, it is still important to keep an eye on the status of your application and follow up with your lender if you do not hear anything within a few days.

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