The blog post provides detailed information on the qualifying requirements, documentation, loan amounts, and other frequently asked questions related to Second Draw PPP Loans. One of the key eligibility criteria is that borrowers must demonstrate a 25% reduction in gross receipts from 2019 to the same period in 2020. Gross receipts encompass all forms of revenue, excluding certain taxes, proceeds from affiliate transactions, and amounts collected for others by certain business types. The required proof for this reduction includes quarterly financial statements, bank statements, and annual IRS tax filings. The maximum loan amount can be calculated using payroll costs from either 2019 or 2020, with specifics varying based on self-employment status and the presence of employees. The post also encourages applicants to review additional FAQs for a comprehensive understanding of the Second Draw PPP program.
Calculating Revenue Reduction
One of the most important qualifying requirements for Second Draw loans is that borrowers must show at least a 25% reduction in “gross receipts” from 2019 and the same period in 2020. Based on this document, the agency defines gross receipts as:
For-profit business:
All revenue in whatever form received or accrued, from whatever source, including:
– Sales of products or services
– Interest
– Dividends
– Rents
– Royalties
– Fees
– Commissions
– Subcontractor costs
– Reimbursements for purchases made by a contractor at a customer’s request
– Investment income
– Payroll taxes
Gross receipts do not include:
– Taxes collected for and remitted to a taxing authority if included in gross or total income
– Proceeds from transactions between a concern and its domestic or foreign affiliates
– Amounts collected for another by a travel agent, real estate agent, advertising agent, or other similar business types
Non-profit 501C(3), 501C(19) Veterans’ Organization, an eligible non-profit news organization, and eligible 501C(6) organization, or an eligible destination marketing organization
Gross receipts mean the gross amount received by the organization during its annual accounting period from all sources without reduction for any costs or expenses.
The reference period term selected to reflect a 25% reduction in gross receipts to qualify for a Second Draw PPP depends on how long the applicant has been in operation.
Required Documentation
Required documentation for proving the reduction in gross receipts includes quarterly financial statements, bank statements, and annual IRS income tax filings. The specific amounts required to compute gross receipts vary by the type of tax return filed.
Maximum Second Draw Loan Amounts
Borrowers can use payroll costs from either calendar year 2019 or 2020 to calculate the maximum Second Draw loan amount. The specific calculations and required documentation vary based on the borrower’s self-employment status and the presence of employees.
Miscellaneous FAQs
Additional FAQs address requirements for payroll costs, missing NAICS codes, and other categories of expenses that can be included in the loan amount calculation. Applicants are advised to review these FAQs for a comprehensive understanding of the Second Draw PPP program.
Question & Answer
1. What is the key eligibility criterion for Second Draw PPP Loans?
Borrowers must demonstrate a 25% reduction in gross receipts from 2019 to the same period in 2020.
2. What does gross receipts encompass?
Gross receipts include all revenue in various forms received or accrued, excluding certain taxes, proceeds from affiliate transactions, and amounts collected for others by certain business types.
3. What documentation is required to prove the reduction in gross receipts?
Required documentation includes quarterly financial statements, bank statements, and annual IRS tax filings.
4. How can borrowers calculate the maximum Second Draw loan amount?
Borrowers can use payroll costs from either 2019 or 2020 to calculate the maximum loan amount, with specifics varying based on self-employment status and the presence of employees.
