Is Revenue Loss Required for Paycheck Protection Program Loan Forgiveness?

Practice Areas

By Maunika Patel and Sanjay Patel

Many companies are getting ready to apply for second draw Paycheck Protection Program (PPP) loans. Eligibility rules differ between first draw and second draw loans. 

One key requirement to take out a second draw PPP loan is to demonstrate that your company has experienced a decline in gross revenue of 25% or more between two corresponding quarters from 2019 to 2020. Borrowers will need to document this revenue decline to qualify for full forgiveness of their second draw PPP loan.

Loan forgiveness rules for first draw PPP loans do not require that you prove a decline in revenue to qualify for forgiveness.

First- and second-draw loans share forgiveness rules in common, many of which have been recently relaxed:

  • You must spend at least 60% of your loan proceeds on eligible payroll expenses to qualify for forgiveness.
  • The remaining 40% must be spent on eligible non-payroll expenses, which have recently expanded to include things like certain operating costs.
  • You must spend all your loan proceeds on eligible expenses during your loan’s eight- to 24-week covered period.
  • Be sure to maintain your employee headcount at pre-pandemic levels.
  • You need to pay your employees at least 75% of their 2019 salary.

Be sure to apply for loan forgiveness within 10 months after the end of your loan’s covered period.


PPP loan forgiveness can be complicated. Work with your experienced Chugh CPAs, LLP professional to ensure you have the best possible chance of success.