Editor’s note: On Tuesday, May 4th the PPP ran out of general funds and the SBA stopped accepting new PPP loan applications. A reserve of funds is still available for community financial institutions that lend to businesses run by women, minorities, and underserved communities. Additionally, a reserve of funds remains for applications previously submitted but not yet reviewed by the SBA. If you have already submitted your loan application, however, this does not guarantee you funding.
How to submit a PPP loan increase request
To submit a PPP loan increase request, you need to contact your lender. Before reaching out, have your PPP loan number ready and reasoning for requesting an increase.
Possible reasons include:
- You did not take the full PPP loan amount you were offered believing you could not use it all
- You gave back a portion of the PPP loan amount believing you could not use it all
- You applied using guidance that was revised making you eligible for a larger amount than you received
In particular, partnerships, seasonal employers, and farmers and ranchers are eligible for an increase in 2021 because of recent changes to how their maximum PPP loan amount is calculated.
These additional funds are distributed through your lender and treated as the same loan. This means they’re still on the original loan terms.
Can I increase my PPP loan amount?
You are eligible to increase your PPP loan amount if you meet both of these criteria:
- You have not already received forgiveness on your original PPP loan
- The increase you are requesting doesn’t take you above your maximum PPP loan amount in 2020
Partnerships
When the PPP first opened on April 3, 2020, partnerships could not count their self-employment income in the calculation of their average monthly payroll costs.
This was quickly changed on April 14, 2020 allowing partnerships to include the self-employment income of the partners as reported on their Schedule K-1.
If your business is a partnership that did not include the self-employment income of the partners in your original loan application, reach out to your lender to apply for the difference.
How to calculate your PPP loan increase as a partnership
Step 1: Add up all of the self-employment income as reported on line 14a of each partner’s Schedule K-1. This amount is capped at $100,000 per partner. For example, if two partners each earned $105,000, count it as $200,000 of self-employment income.
Step 2: Multiply the total self-employment income across all partners by 0.9235. The purpose of this is to remove the partnership entity’s share of self-employment tax.
Step 3: Divide this number by 12.
Step 4: Multiply by 2.5. This is the increase to your PPP loan amount you are eligible for.
Seasonal employers
The second stimulus bill signed on December 27, 2020 changed how seasonal employers calculate their loan amount.
Previously, seasonal employers were given a narrow window of time they could choose from. The last guidance for these businesses in 2020 gave them the option of any 12-week period between May 1, 2019 and September 15, 2019.
Now, seasonal employers can use any 12-week period between February 15, 2019 and February 15, 2020. If doing so increases your average monthly payroll cost calculation, you are eligible for an increase to your PPP loan amount.
How to calculate your PPP loan increase as a seasonal business
Step 1: Determine the 12-week period in between February 15, 2019 and February 15, 2020 where your payroll costs were the highest.
Step 2: Find the annualized values of each employee’s pay during that period. You can find this by dividing each employee’s pay over the 12-week period by 12, then multiplying by 52.
Step 3: Total up the payroll costs from all employees. However, each employee’s pay must be capped at $100,000. For example, if an employee earned $108,000 annualized, count it as only $100,000.
Step 4: Divide the total sum of your payroll costs by 12. This is your new average monthly payroll cost.
Step 5: Compare this with the average monthly payroll cost from your original PPP loan. If you can’t find your original loan application or average monthly payroll cost calculation, you can find it by dividing your 2020 PPP loan amount by 2.5.
Step 6: Subtract your original average monthly payroll cost from your newly calculated average monthly payroll cost. If this number is positive, you’re eligible for an increase to your PPP loan amount.
Step 7: Multiply this difference in your average monthly payroll cost by 2.5. This is the PPP loan amount increase you are eligible for.
Farmers and ranchers
Previously, farmers and ranchers would determine their PPP loan amount using their payroll costs and net income as recorded on line 34 of their 2019 Schedule F.
Now, farmers can request an increase using their gross income as reported on line 9 of their 2019 Schedule F.
How to calculate your PPP loan increase as a farmer and rancher
Step 1: Find your gross income as reported on line 9 of your 2019 Schedule F. Subtract the net income on line 9.
Step 2: Divide the difference of these values by 12.
Step 3: Multiply the result from step two by 2.5. This is the increase to your PPP loan amount you are eligible for.
Other borrowers
Borrowers that fully repaid a first draw PPP loan before December 27, 2020
If a business paid back its original PPP loan before December 27, 2020 and did not apply for forgiveness, they are eligible to re-apply for the original PPP loan amount. For example, if a business received a $20,000 PPP loan and paid it back before December 27, 2020, they are eligible to receive that $20,000 again. It would still be treated as your first draw PPP loan.
To get this amount, apply for a first draw PPP loan again through the same lender. Reach out to your lender to start the process.
Borrowers that returned part of a first draw PPP loan before December 27, 2020
If a business returned or repaid part of their PPP loan before December 27, 2020, they are eligible to apply for the amount they returned or paid. For example, if a business was approved for $100,000 but paid back $25,000 believing they wouldn’t be able to use the full loan amount, they are now eligible to apply for that $25,000.
Borrowers that did not accept the full amount of a first draw PPP loan for which they were approved
If a business took less than the full PPP loan amount, they are eligible to apply for the amount they returned or paid. For example, if a business was approved for $100,000 but opted to only take $75,000 believing they wouldn’t be able to use the full loan amount, they are now eligible to apply for that $25,000.
