As of March 12, 2021
pay. As a result, payroll costs are not reduced by taxes imposed on an employee and
required to be withheld by the employer. However, payroll costs do not include the
employer’s share of payroll tax. For example, the wages of an employee who earned
$4,000 per month in gross wages, from which $500 in federal taxes was withheld, count
as $4,000 in payroll costs. However, the employer-side federal payroll taxes imposed
on the $4,000 in wages are excluded from payroll costs under the statute.
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16.
Question: Is there a limit on the dollar amount of Second Draw PPP Loans a corporate
group can receive?
Answer: Yes, businesses that are part of the same corporate group cannot receive
Second Draw PPP Loans in a total amount of more than $4 million. For purposes of this
limit, businesses are part of a single corporate group if they are majority owned, directly
or indirectly, by a common parent.
17.
Question: I am self-employed and have no employees. How do I calculate my
maximum Second Draw PPP Loan amount if I use gross income?
Answer: The following methodology should be used to calculate the maximum amount
that can be borrowed if you are self-employed and have no employees, and your
principal place of residence is in the United States, including if you are an independent
contractor or operate a sole proprietorship (but not if you are a partner in a partnership;
see Question #4), and you use gross income:
• Step 1: Find your 2019 IRS Form 1040 Schedule C line 7 gross income amount.
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If this amount is zero or less, you are not eligible for a PPP loan.
• Step 2: Calculate the average monthly gross income amount (divide the amount
from Step 1 by 12). If this amount is more than $8,333.33, reduce it to $8,333.33.
• Step 3: Multiply the average monthly gross income amount from Step 2 by 2.5.
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The definition of “payroll costs” in the CARES Act, 15 U.S.C. 636(a)(36)(A)(viii), excludes “taxes imposed or
withheld under chapters 21, 22, or 24 of the Internal Revenue Code of 1986 during the covered period”. As
described above, the SBA interprets this statutory exclusion to mean that payroll costs are calculated on a gross
basis, without subtracting federal taxes that are imposed on the employee or withheld from employee wages. Unlike
employer-side payroll taxes, such employee-side taxes are ordinarily expressed as a reduction in employee take-
home pay; their exclusion from the definition of payroll costs means payroll costs should not be reduced based on
taxes imposed on the employee or withheld from employee wages. This interpretation is consistent with the text of
the statute and advances the legislative purpose of ensuring workers remain paid and employed. Further, because
the reference period for determining a borrower’s maximum loan amount will largely or entirely precede the period
during which borrowers will be subject to the restrictions on allowable uses of the loans, for purposes of the
determination of allowable uses of loans and the amount of loan forgiveness, this statutory exclusion will apply with
respect to such taxes imposed or withheld at any time, not only during such period.
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If you are using 2020 amounts and you have not yet completed a 2020 return, fill it out and compute the value.
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Multiply by 3.5 if your business is in the Accommodation and Food Services sector (NAICS Code 72) and the
business activity code reported on your most recent IRS Form 1040 Schedule C line B begins with 72.