PAYCHECK PROTECTION PROGRAM
HOW TO CALCULATE MAXIMUM LOAN AMOUNTS – BY BUSINESS TYPE
6. Question: How is the maximum PPP loan amount calculated for eligible nonprofit
organizations3 (up to $10 million)? (Note that PPP loan forgiveness amounts will
depend, in part, on the total amount spent during the eight-week period following the first
disbursement of the PPP loan.)
Answer: The following methodology should be used to calculate the maximum amount
that can be borrowed for eligible nonprofit organizations (eligible nonprofit religious
institutions, see the next question):
•
Step 1: Compute 2019 payroll costs by adding the following:
o 2019 gross wages and tips paid to your employees whose principal place of
residence is in the United States, which can be computed using 2019 IRS
Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each
quarter plus any pre-tax employee contributions for health insurance or other
fringe benefits excluded from Taxable Medicare wages & tips, subtracting any
amounts paid to any individual employee in excess of $100,000 and any
amounts paid to any employee whose principal place of residence is outside
the U.S;
o 2019 employer health insurance contributions (portion of IRS Form 990 Part
IX line 9 attributable to health insurance);
o 2019 employer retirement contributions (IRS Form 990 Part IX line 8); and
o 2019 employer state and local taxes assessed on employee compensation,
primarily state unemployment insurance tax (from state quarterly wage
reporting forms).
•
Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1
by 12).
•
Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.
3 “Eligible nonprofit organization” means an organization that is described in section 501(c)(3) of the
Internal Revenue Code of 1986 and that is exempt from taxation under section 501(a) of such Code.
•
Step 4: Add the outstanding amount of any EIDL made between January 31, 2020
and April 3, 2020 that you seek to refinance, less the amount of any advance under an
EIDL COVID-19 loan (because it does not have to be repaid).
The nonprofit organization’s 2019 IRS Form 941 and state quarterly wage unemployment
insurance tax reporting form from each quarter (or equivalent payroll processor records
or IRS Wage and Tax Statements), along with the filed IRS Form 990 Part IX or other
documentation of any retirement and health insurance contributions, must be provided to
substantiate the applied-for PPP loan amount. A payroll statement or similar
documentation from the pay period that covered February 15, 2020 must be provided to
establish you were in operation and had employees on that date. Eligible nonprofits that
do not file an IRS Form 990, typically those with gross receipts less than $50,000, should
see the next question.
n.
7. Question: How is the maximum PPP loan amount calculated for eligible nonprofit
religious institutions, veterans organizations, and tribal businesses (up to $10 million)?
(Note that PPP loan forgiveness amounts will depend, in part, on the total amount spent
during the eight-week period following the first disbursement of the PPP loan.)
Answer: The following methodology should be used to calculate the maximum amount
that can be borrowed for eligible nonprofit religious institutions, veterans organizations
and tribal businesses:
• Step 1: Compute 2019 payroll costs by adding the following:
o 2019 gross wages and tips paid to your employees whose principal place of
residence is in the United States, which can be computed using 2019 IRS
Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each
quarter plus any pre-tax employee contributions for health insurance or other
fringe benefits excluded from Taxable Medicare wages & tips, subtracting any
amounts paid to any individual employee in excess of $100,000 and any
amounts paid to any employee whose principal place of residence is outside
the U.S;
o 2019 employer health insurance contributions;
o 2019 employer retirement contributions and
o 2019 employer state and local taxes assessed on employee compensation,
primarily state unemployment insurance tax (from state quarterly wage
reporting forms).
•
Step 2: Calculate the average monthly payroll costs (divide the amount from Step 1
by 12).
•
Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.
•
Step 4: Add any outstanding amount of any EIDL made between January 31, 2020
and April 3, 2020 that you seek to refinance, less the amount of any advance under an
EIDL COVID-19 loan (because it does not have to be repaid).
The entity’s 2019 IRS Form 941 and state quarterly wage unemployment insurance tax
reporting form from each quarter (or equivalent payroll processor records or IRS Wage
and Tax Statements), along with documentation of any retirement and health insurance
contributions, must be provided to substantiate the applied-for PPP loan amount. A
payroll statement or similar documentation from the pay period that covered February 15,
2020 must be provided to establish you were in operation and had employees on that
date.
