PPP Loan Calculator
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The Paycheck Protection Program (PPP) Loan Calculator helps small business owners, sole proprietors, independent contractors, and non-profits calculate maximum SBA PPP loan amounts, 60/40 expenditure forgiveness thresholds, and 1% fixed-rate loan repayment schedules for unforgiven balances.
The PPP Loan Amount & Forgiveness Formula
Under statutory SBA program rules, maximum PPP loan borrowing is based on average monthly payroll expenses, while full loan forgiveness requires satisfying specific allocation criteria:
Maximum First Draw Loan Amount = ( Average Monthly Payroll Expenses ) × 2.5
Maximum Accommodation / Food Services (NAICS 72) Loan = ( Average Monthly Payroll ) × 3.5
Minimum Payroll Expense For Forgiveness = Total Loan Amount × 60%
Where qualifying expenses during the 8-to-24 week covered period include:
- Payroll Costs (At least 60%): Salaries, wages, commissions, tips, state local employer taxes, and employee health/retirement benefits (capped at $100,000 annualized per employee).
- Non-Payroll Costs (Up to 40%): Business mortgage interest, commercial rent/lease payments, utility bills, covered operations software, and supplier costs.
SBA PPP Forgiveness Expenditure Rules
Reference key SBA program rules governing full loan forgiveness compliance:
| Expenditure Category | Forgiveness Allocation Rule | Eligible Expenses Included |
|---|---|---|
| Payroll Costs | Minimum 60% of Total Forgiveness | Gross wages, group benefits, PTO, state/local payroll taxes. |
| Business Rent / Lease | Up to 40% Combined Non-Payroll | Lease agreements in force prior to February 15, 2020. |
| Business Utilities | Up to 40% Combined Non-Payroll | Electricity, gas, water, internet, and telephone service. |
| Mortgage Interest | Up to 40% Combined Non-Payroll | Interest on real/personal property mortgages signed before Feb 15, 2020. |
Step-by-Step PPP Loan & Forgiveness Calculation Example
Consider a small business with $480,000 in annual qualifying payroll expenses seeking PPP funding:
- Calculate Average Monthly Payroll:
$480,000 / 12 = $40,000 per month. - Calculate Maximum Loan Amount:
$40,000 × 2.5 = $100,000 loan principal. - Determine 60% Minimum Payroll Forgiveness:
$100,000 × 60% = $60,000 minimum spent on payroll. - Verify Eligible Expenses in Covered Period: Business spends $75,000 on payroll and $25,000 on rent/utilities = $100,000 total eligible expenses.
- Forgiveness Result: 100% of the $100,000 loan principal is fully forgiven by the SBA.
Frequently Asked Questions
What happens if a portion of my PPP loan is not forgiven?
Any unforgiven PPP loan balance converts into a 1.00% fixed interest rate loan with a 2-year or 5-year repayment term established by your SBA lender.
Are PPP loans taxable at the federal level?
No. Forgiven PPP loan proceeds are exempt from federal gross income taxes, and expenses paid with forgiven PPP funds remain tax-deductible under federal law.
How does owner compensation capping work for PPP forgiveness?
Owner-employee compensation for forgiveness is capped at 2.5 months of 2019 or 2020 net profit (maximum $20,833 per individual across all businesses).
What form is used to apply for SBA PPP forgiveness?
Borrowers submit SBA Form 3508, Form 3508EZ, or Form 3508S (for loans of $150,000 or less) directly through their SBA lender or the SBA Direct Forgiveness Portal.