2 | P a g e
For new entities requesting first draw loans that were not in business before February 15, 2019, the
Applicant may elect instead to use average monthly payroll costs for the period January 1, 2020
through February 29, 2020.
For new entities requesting second draw loans that did not exist during the 1-year period preceding
February 15, 2020, but were in operation on February 15, 2020, the Applicant may elect to use
average monthly payroll costs from when the entity began operations through the end of calendar
year 2020.
Employee payroll costs consists of the following
:
1.
Compensation paid to employees (excluding compensation to employees whose principal place of
residence is outside the United States) in the form of salary, wages, commissions, or similar
compensation; cash tips or the equivalent (based on employer records of past tips or, in the
absence of such records, a reasonable, good-faith employer estimate of such tips)
2.
Employer payments for employee vacation, parental, family, medical, or sick leave (except those
paid leave amounts for which a credit is allowed under FFCRA Sections 7001 and 7003)
3.
Employer payments to employees with respect to allowance for separation or dismissal
4.
Employer payments for the provision of employee benefits (including insurance premiums)
consisting of group health care coverage, group life, disability, vision, or dental insurance, and
retirement benefits
5.
Employer payments of state and local taxes assessed on employee compensation
To calculate Owner Compensation or Proprietor Expenses
:
For Applicants that file IRS Form 1040, Schedule C and elect to use net profit to calculate loan amount,
owner compensation is computed using line 31 net profit amount, limited to $100,000. Schedule C
filers with no employees must show a net profit on line 31. If line 31 is zero or less, you are not eligible
for a PPP loan.
For Applicants without employees that file IRS Form 1040, Schedule C and elect to use gross income
to calculate loan amount, proprietor expenses are computed using line 7 gross income amount, limited
to $100,000. If line 7 is zero or less, you are not eligible for a PPP loan.
For Applicants with employees that file IRS Form 1040, Schedule C and elect to use gross income to
calculate loan amount, proprietor expenses are computed using line 7 gross income amount minus the
sum of lines 14, 19, and 26, limited to $100,000.
For Applicants that are partnerships, owner compensation is computed using net earnings from self-
employment of individual general partners, as reported on IRS Form 1065 K-1, box 14a, reduced by
section 179 expense deduction claimed in box 12, unreimbursed partnership expenses claimed, and
depletion claimed on oil and gas properties, multiplied by 0.9235, that is not more than $100,000 per
partner.
For Applicants that are farmers and ranchers
without employees, owner compensation is computed
using IRS Form 1040 Schedule F line 9 gross income, up to $100,000. Schedule F filers with no
employees must show positive gross income on line 9.
For items 1-3 in the aggregate, exclude costs over $100,000 on an annualized basis, as prorated for the period during
which the payments are made or the obligation to make the payments is incurred, for each employee.
Do not include any employee paid amounts that the employer withheld and remitted on their behalf.
Do not include any employee paid amounts that the employer withheld and remitted on their behalf.
Owner compensation includes wage, commissions, income or net earnings from self-employment or similar compensation.
Only farmers and ranchers who (1) file a Schedule F with their Form 1040 and (2) report Schedule F farm income on IRS Form 1040
Schedule 1 may use gross income to determine their loan amount. Single member LLCs and qualified joint ventures, as defined by
the IRS, that file Schedule F with their Form 1040 may use gross income to determine their loan amount. Only one spouse in a
qualified joint venture may submit a PPP loan application on behalf of the qualified joint venture.