Step 2: Calculate the average monthly net profit amount (divide the amount from Step 1 by 12, or the number of months you were in operation in 2020 if not in operation the entire year – see above). If this amount is zero or less, you are not eligible for a Second Draw PPP Loan. You can get a draft of the 2020 Form Schedule C on the IRS website – If the net profit amount is over $100,000, reduce it to $100,000. if you began your business on February 1, 2020), you should use the net profit from the business during the period of operations in 2020. If you began a new business that operated on February 20, 2020, but were not in business for 12 months in 2020 (e.g. If you are using 2020 and have not yet filed a 2020 return, fill out a draft of a 2020 Form Schedule C using your business income and expense records and compute the net profit. Step 1: Find your 2019 or 2020 IRS Form 1040 Schedule C line 31 net profit amount. The amount of your new PPP loan is generally calculated in the same manner as your First Draw PPP Loan, with a few important differences.įor your Second Draw PPP Loan, you should calculate the amount of the new loan as follows:

However, if you apply for forgiveness of your new loan, you must provide information showing a 25% revenue reduction on or before the date you apply for forgiveness.

For most new PPP loans, less than $150,000, you will not need to submit documentation to show a 25% revenue reduction in 2020 relative to 2019 - at least when you apply for a loan.

If your First Draw PPP Loan was or will be forgiven, this is not included in your “gross receipts.” Generally, receipts are considered “total receipts” or “total sales” (or in the case of a sole proprietorship or self-employed individual “gross income”). The term “gross receipts” includes all your business income, including sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. If your gross receipts were $250,0 but only $150,0, you experienced a 40% decline and may qualify. For example, if you had gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020, you would have experienced a revenue reduction of 40% between the quarters, and are therefore eligible for a Second Draw PPP Loan (assuming all other eligibility criteria are met).

You can also qualify if your total 2020 gross receipts are less than your total 2019 gross receipts. For this purpose, you must compare your quarterly gross receipts/sales for any quarter in 2020 with the gross receipts for the same quarter in 2019. You must have experienced a revenue reduction of 25% or more in 2020 compared to 2019.You must have already spent the money you received through your prior PPP loan last year (“First Draw PPP Loan”).If you are self-employed/or a sole proprietor, with no W-2 employees, and you report income from your business on your personal tax return (Form 1040/Schedule C), and if you qualified for a First Draw PPP Loan and would continue to qualify, here are the other requirements for a Second Draw PPP Loan: This alert addresses the requirements and issues for the self-employed and sole proprietors with no employees, who wish to apply for a Second Draw PPP Loan under the new law. The Economic Aid Act authorizes new PPP loans for first-time borrowers, as well as applications for a Second Draw PPP Loan for those that already received a loan last year.

Ppp gross receipts