PPP: How do I calculate Average Monthly Payroll and Loan Request Amount? (2021 updates!)

In this 2-minute read:

  • How to determine your average monthly payroll for your PPP loan
  • How to determine your Loan Request Amount for your PPP loan
  • What about NAICS code 72 businesses for second draw PPP loans?
  • What to do if you have received EIDL or other SBA money in 2020

IMPORTANT UPDATE FOR 2021: Congress has approved an extension of the PPP loan program until March 31, 2021, including “second draw” PPP loans for businesses that received PPP funding in 2020. Start your PPP loan application now!

Pretty much every business under 500 employees in America is scrambling to apply through eligible lenders for a Paycheck Protection Program first or second draw loan under the $2 trillion CARES act and subsequent renewals of funding. 

Understandably, the application process is a little confusing and a lot of business owners are asking “How do I determine my Average Monthly Payroll and/or my Loan Request Amount” when submitting a first or second draw PPP loan application? Let’s see if we can shed some light on this important issue. There are some changes for 2021 that can have a big impact on certain types of businesses, particularly those that fit into NAICS code 72.

Get your PPP loan or second draw PPP loan through Womply! Womply has helped over 200,000 businesses get their PPP funding. It’s free to apply for a PPP loan, and Womply can help connect you with an SBA lender that’s right for you! Start your PPP application.

How do I calculate my Average Monthly Payroll for my Paycheck Protection Program loan application?

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.

average monthly payroll box on PPP loan application

  • This is a critical piece of information that requires that you provide payroll documentation, and is used in the calculation that determines your loan request amount. (see below)
  • 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!
  • Read this now to understand what qualifies as payroll costs. 
  • You cannot estimate this figure—you must calculate it accurately.

How do I calculate my Loan Request Amount correctly for a paycheck protection program loan?

Loan Request amount box for PPP loan application

  • If your business HAS NOT received loans or advances under the EIDL program in 2020 then:
    • 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)
    • This formula will work for 99.9% of businesses, independent contractors, sole proprietors, and eligible self-employed businesses NOT in NAICS category 72 (food and accommodations businesses).
    • IMPORTANT; IF YOUR BUSINESS IS CATEGORIZED UNDER NAICS CATEGORY 72, you may request 3.5X your average monthly payroll FOR SECOND DRAW PPP LOANS ONLY. Learn more here.
  • If your business HAS received loans or advances under the EIDL program or other SBA funding in 2020, contact your loan provider and they’ll help you determine the accurate number, because it’s somewhat complicated. This only applies if you’ve received money in your bank account under EIDL or other SBA funding in 2020—otherwise apply the formula above.
  • Do not enter $0 — this means you are asking for $0 in loans
  • Do not enter more than $10m for first draw loans and $2m for second draw loans — you will be disqualified.
  • If you request less than 2.5x your Average Monthly Payroll that means you want less money than you are eligible for. This is allowable but not recommended. You can only apply for PPP once, and deviating from the common formula may slow down your application.

PLEASE NOTE! If you submit your application with errors you cannot edit your entry and you will have to start again!

If you haven’t yet started your PPP loan application process, we recommend you submit your application immediately.

Let Womply help you apply for your PPP loans!

As you know, it’s free to apply for a PPP loan, and we know you have lots of choices. So why should you let Womply connect you with an approved SBA lender? Because we know what we’re doing and people love the help we provide. We’ve helped over 200,000 businesses, contractors, sole proprietors, and self-employed individuals get approved. Don’t wait! The deadline is March 31, 2021.

Start your PPP application now!

Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!


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