Last updated June 12—The Paycheck Protection Program (PPP) helps small businesses with their payroll and related costs for an eight-week period. Loan forgiveness is available for small businesses that maintain their workforce.
If I am ready to apply, what are the steps I need to take?
What documentation do I need to apply for a PPP loan?
What do payroll costs include?
What is excluded from the definition of payroll costs?
How do I calculate my maximum loan amount?
What if I lay off employees or reduce wages? Can I still get my loan forgiven?
Do I have to pay tax on amount of loan that is forgiven?
What happens if PPP Loan Funds are misued by the borrower?
Can I apply for another SBA loan?
If I need additional assistance, where do I go?
You will need to provide your lender with payroll documentation. See below for additional information which may be requested by your lender:
Rent and Utilities
*This exclusion does not mean that the loan cannot be requested for anything related to employees making more than $100,000. Rather, for employees making more than $100,000, you are only allowed to request loan proceeds on the first $100,000 of their salary, prorated for the covered period.
Step 1: Aggregate payroll costs 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 Economic Injury Disaster Loan (EIDL) made between January 31, 2020, and April 3, 2020, less the amount of an “Advance” under the EIDL COVID-19 loan (because it does not have to be repaid).
Example 1—No employees make more than $100,000
Example 2—Some employees make more than $100,000
Example 3—No employee makes more than $100,000, outstanding EIDL Loan of $10,000
Example 4—Some employees make more than $100,000, outstanding EIDL loan of $10,000
Your loan forgiveness will be reduced if you decrease your full-time employee headcount, or if you decrease salaries and wages by more than 25 percent for any employee who made less than $100,000 annualized in 2019.
Note: You have until December 31, 2020, to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020.
The PPP Flexibility Act added additional exemptions to the reduction in the amount of loan forgiveness. Under the new law, the amount of loan forgiveness will not be reduced based on a reduction in the number of full-time equivalent employees if the borrower, in good faith:
No. APMA recommends speaking with your tax accountant or preparer on any tax-related guidance.
If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as fraud.
Yes, while small businesses can only apply for one PPP loan, they can apply for additional SBA loans, including the EIDL loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
At least 75 percent of the PPP loan proceeds shall be used for payroll costs. For purposes of determining the percentage of use of proceeds for payroll costs, the amount of any EIDL refinanced will be included. However, for purposes of loan forgiveness, the borrowers will have to determine the proceeds used for the payroll costs in order to determine the amount forgiveness.
We recommend speaking with your accountant or financial advisor. SBA offers work with local partners to provide assistance to small businesses, and you find a local partner here. For more information, access answers to FAQs issued by The Small Business Administration and in consultation with the Department of Treasury.