Defining “payroll costs” for BlueVine
Eligible Payrolls Costs Include:
- Compensation, including:
- Salary, wage, commission, or similar
- We recommend using your 941 form, 940 or 944 forms, 1120-S form, 1040 - Schedule C form, or payroll documentation to determine your compensation amount
- Review our Payroll Task and Required Documentation support article for more information regarding payroll documents
- Salary, wage, commission, or similar
Note: Exclude employees earning over $100,000 and non-U.S. employees.
Non-eligible Payroll Costs
- Compensation of employees whose principal place of residence is outside of the U.S
- Any compensation paid to an employee that exceeds an annual salary of $100,000 (as prorated during the payment period or payment obligation period)
- Payments made to independent contractors
- Federal taxes imposed or withheld (including under chapters 21 (FICA), 22 (Railroad Retirement Act), and 24 (employee withholdings) of the IRS code
- Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
All payroll calculations should comply with SBA guidance.
How to calculate PPP payroll costs by business entity type
Determine whether your business classifies as a regular, seasonal, new business, or sole proprietorship and use the timeframe recommended below to calculate your monthly average payroll costs.
- U.S. Small Businesses: The applicable period for an established small business is (1) calendar year 2019 or (2) calendar year 2020. If your business is not self-employed, you may also use the prior 12 months
- Seasonal Businesses: The applicable period for a seasonal business that only operates during certain parts of the year is any 12-week period, at the applicant’s discretion, between Feb 15, 2019, and February 15, 2020 (3 months)
- New Small Business: The applicable period for a new small business is from Jan 1, 2020, through Feb 29, 2020 (2 months)
- Not an Employer: The income for sole-proprietors is reported on your Schedule C (line 31). If you have filed a Schedule C and 944 forms, add line 31 from Schedule C to lines 1 and 2 from the 944 form. The applicable period is a full 2019 calendar year unless you are a seasonal business or new business
A few special rules apply to farmers and ranchers, and fishing boat owners. Please visit the SBA’s PPP page for guidance on those rules if you believe they may apply.
Totaling average payroll costs
Add all of your eligible payroll costs together over your applicable period and divide them by the applicable period. Of note, BlueVine will do this for you in your PPP application based on your inputs.
Tip: Remember to exclude non-eligible payroll costs including employees earning over $100,000 and non-U.S. employees.
How BlueVine calculates your pre-approved PPP loan
BlueVine calculates your pre-approved PPP loan with a simple equation using the inputs you provided on your average payroll costs and any applicable Economic Injury Disaster Loan (EIDL) you received between January 31, 2020, and April 3, 2020.
We take your average payroll costs and multiply them by 2.5 (or 3.5 for restaurants and hotels1 applying for Second Draw).
Under the rare circumstance that you received an applicable EIDL loan, we then add the current outstanding balance of EIDL.
For more information on how to estimate first draw loan amounts, review the SBA's How to Calculate First Draw PPP Loan Amounts article.
For more information on how to estimate second draw loan amounts, review the SBA's How to Calculate Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide article.
1 The 3.5x multiplier applies only to businesses falling under North American Industry Classification System Code 72.
The information, opinions, and advice in this blog post are provided for educational purposes only, and do not necessarily state or reflect those of BlueVine and/or its partners, including The Bancorp Bank and Celtic Bank. Neither BlueVine nor its partners are responsible for the accuracy of any content provided by author(s) or contributor(s). For information about BlueVine products and services, please visit the BlueVine FAQ page. For information about the Paycheck Protection Program, please visit the SBA’s page.