He recorded a 25% reduction in Q2 2020 relative to what he recorded in Q2 2019. At first glance, he thinks he’s ineligible-until he looks at his quarterly earnings.Īlthough he didn’t record a 25% reduction in gross receipts when comparing years, Bixby is still eligible. When looking at his annual numbers, his business recorded $200,000 in gross receipts in 2019 and $180,000 in 2020. But now, Bixby’s business needs more funds to make it through to spring. Using quarterly gross receiptsīixby’s Farmer Bees Honey received a PPP loan in 2020 that was fully forgiven. That’s a drop in revenue of 50% between 20.īecause Toni’s business saw a greater than 25% reduction in revenue on the year, she is eligible for a second PPP loan. When she checks her records, she sees $500,000 in gross receipts recorded in 2019. In looking at her year end financials, Toni sees that her business recorded $250,000 in gross receipts in 2020. Toni is now looking to apply for a second draw PPP loan. Toni’s Temporary Tattoos received a PPP loan in 2020 and applied for forgiveness in December of the same year. Revenue reduction calculation examples Using annual gross receipts You can also find your gross revenue and returns and allowances by looking at your income statement.ĭo not include any relief received in 2020 in your gross receipts. You can find your gross receipts by looking at line 1 or 1C of your respective tax return. “ Receipts means all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.” The SBA provides a detailed explanation on what’s included in gross receipts: Gross receipts is the total amount of money your business has received in a given period. The 25% reduction can be shown using Q2, Q3, or Q4 2020. You must use Q1 2020 as your comparison period. If a business started in 2020 and was operational on February 15, 2020, it is eligible for a second PPP loan. Comparing gross receipts in a quarter of 2020 with that same quarter in 2019.Comparing annual gross receipts between 20 as reported on a completed tax return.If your loan amount is greater than $150,000, you will need to prove it during the application process.įurther reading: Do I Qualify for the PPP Loan? The 25 percent reduction in revenue is calculated one of two ways: To apply, a business must have used up their first PPP loan, have no more than 300 employees, and show a 25% reduction in revenue from 2019 to 2020.įor loan amounts under $150,000, the 25% reduction needs to be proven during the forgiveness process. This new, second PPP loan means new eligibility requirements. The 25% reduction in revenue criteria only applies to businesses applying for their second draw PPP loan. What is the 25% reduction in revenue criteria?

Monthly gross receipts example