Second-round Paycheck Protection Program (PPP) loans are available to businesses that have already taken out their first PPP loan. However, there are some important eligibility requirements. One requirement is that businesses must show a 25% decline in revenue between corresponding quarters of 2019 and 2020.
To determine whether you qualify for a second-round PPP loan, you need to compare the same quarters across the two years. For example, a business needs to compare the second quarter of 2019 with the second quarter of 2020 to determine whether it had a 25% revenue decline.
The revenue decline must be at least 25% between the corresponding quarters for a business to qualify for a second-draw PPP loan.
Companies with multiple affiliated entities do not need to demonstrate a 25% revenue decline across all entities. Each PPP loan application is connected to one Employer Identification Number (EIN). Businesses only need to demonstrate a 25% revenue decline for the one EIN that they used to apply for the PPP loan.
Businesses applying for their first-round PPP loan do not need to demonstrate a 25% revenue decline to qualify for funding.
Companies do not need to submit documentation proving their revenue decline if they are applying for a second-round PPP loan of $150,000 or less. However, this documentation will be required when businesses apply for second-round loan forgiveness. Be prepared to document the revenue decline with relevant tax forms, such as annual taxes, a copy of quarterly income statements, or bank statements.
Businesses do not need to prove a decline in revenue to qualify for forgiveness on their first-round PPP loan
For help applying for your first- or second-round PPP loan, or getting your PPP loan forgiven, please contact your experienced Chugh CPAs, LLP professional.