Paycheck Protection: How Corporations Calculate Wages & Eligibility

Updated: Sep 8, 2021

The loan calculation itself requires you to use your annual salary, and the annual salary of any W2 employees whose primary residence is the United States.

The PPP sets a cap on salaries of $100,000—if you or any of your employees make more than that, you can only write $100,000 on your application. Above and beyond the $100,000 salary mark, you can also include related payroll expenses, such as health insurance, retirement contributions, paid sick leave, vacation pay, and severance pay.

In 2020, PPP loans were calculated using your 2019 payroll costs and net profit. But for PPP loans in 2021, you have the option of using your 2019 or 2020 payroll costs and net profit.

Documents Corporations Use To Calculate Payroll Costs

Corporations report their wages on their employee wage reports and quarterly tax filings to the IRS. Form W3 Line 1 shows the annual wages paid to employees throughout a calendar year. This document combined with each employees w2 can be used as evidence of annual wages. Alternatively - quarterly Form 941 Line 2 will show the annual wages paid to employees.

Given either of the two above amounts -- corporations are eligible to receive 2.5 months of this annual amount via the Paycheck Protection Program (subject to some limitations, such as no employee being paid greater than $100,000 salary).

A note on loan forgiveness

Businesses have 24 weeks upon receive the PPP proceeds to use the funds on qualified expenses in order to have them forgiven. Since the payroll calculation is only funding you for 10 weeks of payment, many businesses are able to use the full extent of proceeds to pay staff and thus have the most straightforward forgiveness application. Business must:

  1. Spend at least 60% of the funds on payroll

  2. Spend the remaining 40% on eligible expenses (rent, utilities, suppliers, software)

  3. Prove your expenses that you spent the loan amount on (eg: bookkeeping records).

Apply for PPP funding

Kwantx Capital consults small businesses on applying for the paycheck protection program by verifying their documentation, payroll calculations, representing them with a qualified lender, assisting in loan closing, guiding through the use of proceeds so they are fully forgiven, and then applying for forgiveness of the received amount.

The application process is:

  1. Corporation submits relevant documents to Kwantx.

  2. Kwantx verifies payroll calculations and eligibility, then sends to lender.

  3. Lender underwriters review application and submit to SBA.

  4. SBA submits closing documents for e-signature.

  5. Proceeds sent to Corporations deposit location.

  6. 24 weeks to use proceeds, then apply for forgiveness.

Kwantx is a startup financial consulting firm based out of Palo Alto, California. The firm is run by Adrian Bial, a registered investment advisor and 3-time financial entrepreneur. Kwantx works on a success-only fee upon loan closing, and again at loan forgiveness. Interested corporation can apply here by uploading the documents listed, which will be submit for initial verification.

Let us know if you have any questions by emailing