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Paycheck Protection Program
Revenue Reduction Information for Forgiveness (as of 3/2021)
Second Draw Loan – Revenue Reduction Calculation
For detailed instructions on how to calculate your revenue reduction, see the SBA’s Second Draw PPP Loans: How to Calculate
Revenue Reduction and Maximum Loan Amounts Including What Documentation to Provide.
Applicants seeking second draw loans must certify that they have realized a 25% reduction in gross receipts.0F
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The appropriate
reference period for determining revenue reduction depends on how long you have been in operation:
For all entities (other than those specifically set forth below):
o
Applicants must demonstrate that gross receipts in any calendar quarter of 2020 were at least 25%
lower than the same quarter of 2019. Alternatively, Applicants may compare annual gross receipts in
2020 with annual gross receipts in 2019 if they were in business in 2019; Applicants choosing to use
annual gross receipts must enter “Annual” in the reference period and 2020 period fields and must
submit copies of annual tax forms substantiating the annual gross receipts reduction.
In operation Q3 and Q4 2019 but not Q1 or Q2 2019:
o
For entities not in business during the first and second quarters of 2019 but in operation during the
third and fourth quarters of 2019, Applicants must demonstrate that gross receipts in any quarter of
2020 were at least 25% lower than during either the third or fourth quarters of 2019.
In operation Q4 2019 but not Q1, Q2, or Q3 2019:
o
For entities not in business during the first, second, and third quarters of 2019 but in operation during
the fourth quarter of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020
were at least 25% lower than the fourth quarter of 2019.
In operation Feb. 15, 2020 but not during 2019:
o
For entities not in business during 2019 but in operation on February 15, 2020, Applicants must demonstrate
that gross receipts in the second, third, or fourth quarter of 2020 were at least 25% lower than the first quarter
of 2020.
To calculate Revenue Reduction:
Reference Period Gross Receipts – 2020 Period Gross Receipts
X 100 = % Revenue Reduction
Reference Period Gross Receipts
If applicable, Applicants with affiliates must add the gross receipts of their affiliates for purposes of the revenue reduction
calculation.
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Please review the SBA’s definition of gross receipts (86 Fed. Reg. 3712, 3718 (Jan 14. 2021)) and SBA’s How to Calculate Maximum Loan
Amounts for Second Draw PPP Loans for more information.
2
Please review the SBA’s affiliation rules, as applicable to the PPP (86 Fed. Reg. 3692, 3698-99 (Jan. 14, 2021)) and the SBA’s rules for calculating
the gross receipts of affiliates (86 Fed. Reg. 3712, 3718 (Jan 14. 2021)) for more information.
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Second Draw Loan – Revenue Reduction Documentation
If your loan is equal to or less than $150,000, and you have not previously provided the Bank with your revenue
reduction documentation and information, you are required to submit documentation to establish that you
(together with your affiliates, if applicable
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) meet the revenue reduction requirement (“Supporting Documents”)
on or before the date you apply for loan forgiveness (or upon SBA request), as required under the Economic
Aid Act.
You must submit documentation demonstrating a reduction in gross receipts3F
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of 25% or greater between your
reference period and your 2020 period (see below for additional information about permitted reference periods).
You must provide one of the following (Applicants with affiliates must also provide one of the
following per affiliate
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):
Annual IRS income tax forms5F
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for 2019 and 2020 (required if you choose an annual reference period).
If the entity has not yet filed a tax return for 2020, the Applicant must fill out the return forms,
compute the relevant gross receipts value, and sign and date the return, attesting that the values
that enter into the gross receipts computation are the same values that will be filed on the entity’s
tax return.
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Quarterly income statements for your reference period and your 2020 period (if you choose a
quarterly reference period). The Applicant must sign and date the first page of each income
statement and initial all other pages, attesting to their accuracy. If the income statements do not
specifically identify the line item(s) that constitute gross receipts, the Applicant must annotate which
line item(s) constitute gross receipts.
Quarterly or monthly bank statements showing deposits for your reference period and your 2020
period (if you choose a quarterly reference period). The Applicant must annotate, if it is not clear,
which deposits listed on the bank statement constitute gross receipts and which do not.
Additionally, you must also provide a revenue reduction schedule (“Revenue Reduction Schedule”) unless your
income statements clearly show the total gross receipt amount for your reference period and your 2020 period.
The Revenue Reduction Schedule should demonstrate how you calculated your gross receipts (including any
affiliate gross receipts required by the SBA affiliation rules) for each of these periods. The Revenue Reduction
Schedule should (i) show the calculation used to determine your gross receipts amount for each of these periods
using the numbers provided in your Supporting Documents, and (ii) clearly indicate the Supporting Document(s)
used for each number (see Appendix A for an example of an appropriate Revenue Reduction Schedule). If the
numbers used on your Revenue Reduction Schedule cannot be substantiated with your Supporting Documents
or the total gross receipts listed on your Revenue Reduction Schedule for each of these periods do not match
your gross receipts provided in your application, it may cause delays in processing your application. Please see
SBA rules for information on how to calculate your gross receipts.
3
Please review the SBA’s affiliation rules, as applicable to the PPP (86 Fed. Reg. 3692, 3698-99 (Jan. 14, 2021)).
4
Please review the SBA’s rules defining gross receipts (86 Fed. Reg. 3712, 3718 (Jan. 14, 2021)) and How to Calculate Revenue Reduction
and Maximum Loan Amounts for Second Draw PPP Loans for information on what should be included and excluded from gross receipts.
5
Please review the SBA’s rules for calculating the gross receipts of affiliates (86 Fed. Reg. 3712, 3718 (Jan. 14, 2021)).
6
Entities that use a fiscal year that differs from the calendar year to file taxes may document a reduction in gross receipts with income
tax returns only if their fiscal year contains all of the second, third, and fourth quarters of the calendar year (i.e., have a fiscal year start
date of February 1, March 1, or April 1).
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The amounts required to compute gross receipts varies by the entity tax return type. Please review How to Calculate Revenue
Reduction and Maximum Loan Amounts for Second Draw PPP Loans for information on what amounts should be used.
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Notes with respect to Revenue Reduction Documentation
Reference period. The appropriate reference period for determining revenue reduction depends on how long you have
been in operation:
For all entities (other than those specifically set forth below):
o
Applicants must demonstrate that gross receipts in any calendar quarter of 2020 were at least 25%
lower than the same quarter of 2019. Alternatively, Applicants may compare annual gross receipts
in 2020 with annual gross receipts in 2019 if they were in business in 2019; Applicants choosing to
use annual gross receipts must enter “Annual” in the reference period and 2020 period fields and
must submit copies of annual tax forms substantiating the annual gross receipts reduction.
In operation Q3 and Q4 2019 but not Q1 or Q2 2019:
o
For entities not in business during the first and second quarters of 2019 but in operation during the
third and fourth quarters of 2019, Applicants must demonstrate that gross receipts in any quarter of
2020 were at least 25% lower than during either the third or fourth quarters of 2019.
In operation Q4 2019 but not Q1, Q2, or Q3 2019:
o
For entities not in business during the first, second, and third quarters of 2019 but in operation during
the fourth quarter of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020
were at least 25% lower than the fourth quarter of 2019.
In operation Feb. 15, 2020 but not during 2019:
o
For entities not in business during 2019 but in operation on February 15, 2020, Applicants must
demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25% lower
than the first quarter of 2020.
The Small Business Administration and the Department of Treasury continue to provide additional guidance
concerning the Paycheck Protection Program. Thus, Bank of America makes no representation that information
contained herein is up to date or complete. Before submitting your PPP loan application, Applicants should visit
the SBA, U.S. Treasury Assistance for Small Businesses and U.S. Treasury FAQ websites for the latest information
and guidance related to the Paycheck Protection Program.
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Appendix A – Sample Revenue Reduction Schedule
Sample Revenue Reduction Schedule – Bank Statements
Reference Period: _____________________________
Gross Receipt Amount Relevant Document Reference
$2,000.00
Bank Statement dated __________
$3,000.00
Bank Statement dated __________
$4,000.00
Bank Statement dated __________
Reference period gross
receipts
$9,000.00
2020 Period: _________________________________
Gross Receipt Amount Relevant Document Reference
$1,000.00
Bank Statement dated __________
$1,000.00
Bank Statement dated __________
$1,000.00
Bank Statement dated __________
2020 period gross receipts $3,000.00
