You’ll use your gross income—not your net income—to calculate your PPP loan amount. Take your gross income (not to exceed $100,000), divide it by 12, and multiply that number by 2.5 to get your loan amount.

How much of my PPP loan must be used for payroll?

60 percent
At least 60 percent of the PPP loan must be used to fund payroll and employee benefits costs.

Is the PPP loan based on gross or net income?

Here are the steps to calculating your PPP loan amount as a sole proprietor without payroll: Take your gross income as reported on line 7 of your 2019 or 2020 Schedule C. If this value is greater than $100,000 (the maximum allowed amount), use $100,000.

Can you use the entire PPP loan on payroll?

What can I spend my PPP funds on? Generally, PPP funds can be used for four purposes: payroll, mortgage interest, rent/lease, and utilities. Payroll should be the major use of the loan.

How to calculate average monthly payroll and loan?

Multiply your Average Monthly Payroll (the number you determined by following the steps above) by 2.5 and round to the nearest dollar (unless your business fits into NAICS code 72; then use 3.5X for second draw loans. See below)

How is payroll calculated for a PPP loan?

Calculating your average monthly payroll for your PPP loan is the fundamental part of the whole process, as this figure is used to determine how much you can borrow. IMPORTANT: Don’t put $0 for your payroll (even if you have not paid anyone or yourself recently) or you’ll have to re-apply!

How to calculate your paycheck protection program loan amount?

U.S. annual employee salaries, including wages, commissions, tips, and state and local payroll taxes. Each employee is capped at $100,000 annually. Your 2019 or 2020 self-employment earnings as reported on your Schedule K-1 (line 14), then multiplied by 0.9235. You may include K-1 earnings as salary for each partner, up to $100,000.

How to calculate your maximum first draw PPP loan amount?

To determine your maximum first draw PPP loan amount if you are self-employed and have employees, use the following methodology to calculate your maximum loan amount: