Payroll costs include:
Employee salary, wages and commissions; payment of cash tips; payment of vacation; parental, family, medical or sick leave; allowance for dismissal or separation; payment required for group health benefits (including insurance premiums); payment of retirement benefits; or payment of state or local tax assessed on employee compensation; and sole proprietor income or independent contractor compensation not in excess of $100,000.
Payroll costs exclude:
Compensation of an individual person in excess of $100,000 (as prorated for the period); federal employment taxes imposed or withheld taxes; compensation to an employee whose principal residence is outside of the U.S.; qualified sick leave for which a credit is allowed under Section 7001 of the Families First Coronavirus Response Act; and qualified family leave wages for which a credit is allowed under Section 7001 of the Families First Coronavirus Response Act.
Compensation in excess of $100,000
Subtract any compensation paid to an employee in excess of $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.
As the small business community continues to navigate through the COVID–19 crisis, access to capital has never been more necessary. Business owners around the country are lining up for their share of the billions of dollars in emergency government-backed financing that will help them keep employees on payroll and to cover business operating expenses during the pandemic.
Funding Circle will continue to process Paycheck Protection Program loans for small business owners as soon as the government authorizes the program to reopen — which is expected as early as January 15, 2021.
As you prepare to submit your application, there are steps you can take now. This should help make the process smoother and to give you an idea of what to expect. Below is Funding Circle’s Paycheck Protection Program Loan Calculator.
The Paycheck Protection Program (PPP) was originally authorized as part of Congress’ Coronavirus Aid, Relief and Economic Security (CARES) Act. It has been reauthorized and expanded through the passage of the ‘‘Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act’’. PPP loans are a SBA loan that is up to 100% forgivable and available to eligible small businesses through any SBA approved lender including Funding Circle. The Paycheck Protection Program, which is available through March 31, 2021 or until funds have been exhausted (whatever comes first), is meant to incentivize business owners to keep employees on the payroll at the same or a comparable salary. As a result, the features and factors that go into calculating your COVID–19 relief loan — from the amount you can borrow to the amount eligible for forgiveness — is derived based on your monthly payroll expenses for the time period between 8 and 24 weeks after origination.
Up to 100% of the PPP loan can be forgiven if the funds are used in accordance with the rules as prescribed by the SBA. At least 60% of the loan must go to covered payroll costs and the rest to covered non-payroll expenses:
Payroll costs such as:
Non-payroll costs such as:
But what’s the size of your loan? That’s where the PPP Loan Calculator comes into play.The Paycheck Protection Program, which lasts through March 31, 2021 or until funds have been exhausted (whichever comes first), is meant to incentivize business owners to keep employees on the payroll at the same or a comparable salary. As a result, the features and factors that go into calculating your COVID–19 relief loan — from the amount you can borrow to the amount eligible for forgiveness — is derived based on your monthly payroll expenses for the time period between 8 and 24 weeks after origination.
Payroll is such a broad term. There’s little doubt that you are wondering just like many other business owners like you what this encompasses. Payroll costs include:
The Funding Circle CARES Act SBA Loan Calculator will help you determine the amount you can likely borrow, based on a set of relevant criteria. Below, use the calculator to enter your business information and determine the size of the COVID–19 relief loan you may qualify for.
The Funding Circle CARES Act SBA Loan calculator will walk you through a series of questions, beginning with whether you were in business on Feb. 15, 2020. You will also need to know what your total payroll costs were in the last 12 months.
Based on those criteria, the SBA Loan Calculator will tell you the amount you may qualify for, so you don’t have to do any back–of–the–napkin math on your own.
Step 1: Aggregate payroll costs from 2019 or 2020 for employees whose principal place of residence is the United States.
Step 2: Subtract any compensation paid to an employee in excess of $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.
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.
Second draws only: If your business is a restaurant or accommodations (your business’ NAICS code starts with 72), you may multiply the average monthly payroll costs from Step 3 by 3.5. Otherwise, multiple your monthly average payroll costs from Step 3 by 2.5.
Step 5: For First draw loans only: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance. Do not include the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).
Partnerships (LLC), Self Employed, Sole Proprietor, or Independent Contractor? Your calculations for maximum loan amount differ. See the question “How do I calculate the maximum amount I can borrow?” in our loan forgiveness FAQ.
PPP small business loans are 100% backed by the government and there are no borrower or lender fees to apply or obtain a PPP loan. If any portion of your PPP loan that doesn’t qualify for forgiveness, the remaining portion will carry a fixed interest rate of 1% for a five year term. On top of that, if a portion of your loan is not forgivable, you’ll get even more cash flow relief during COVID–19, considering that your first payment will not be due for six months after the SBA has reviewed your forgiveness application.
To be eligible for loan forgiveness, you must keep your payroll intact or speedily rehire any employees who were let go as a result of COVID–19. If the number of your staff or their salaries and wages decreases, the amount of the business loan that’s forgivable will be decreased as well.
Paycheck Protection Program loans issued by Funding Circle after June 5, 2020 will have a term of five years and have a cap of $2 million. Funding Circle urges business owners to apply for a PPP relief loan as soon as possible since funds are limited and will be issued on a first come first served basis. With that in mind, you can apply now here.
Now is the time to prepare your application so that you’re ready to apply for a PPP loan with Funding Circle when the program reopens again (subject to SBA approval).
What information will I need to complete my application?
Self Employed, Sole Proprietor, Independent Contractor:
* This list of documents was last updated January 8, 2021 and is subject to change based on SBA guidance.
In short, no: It’s not your only option. The SBA is also delivering emergency sources of capital through the Economic Injury Disaster Loan (EIDL) and the Economic Injury Disaster Grant. Business owners can access the application for an EIDL loan for up to $2 million right on the SBA website. The term for the loan is up to 30 years at a fixed interest rate of 3.75% for small businesses / 2.75% for nonprofits. One of the main criteria is that you must employ 500 or fewer people.
You can request an Economic Injury Disaster Grant of up to $10,000 through the EIDL application process with the SBA. The cash grant is forgivable if you direct the funds for acceptable reasons. These reasons include paid leave, payroll expenses, higher costs in the supply chain as a result of COVID–19, mortgage/lease payments, and other bills that can’t be paid as a direct result of revenue loss from the economic shutdown.
Similar to Paycheck Protection Program funds, EIDL loans, and grants are limited in nature, so time is of the essence.