The SBA today released information on how to calculate revenue reduction and maximum loan amounts for Second Draw PPP loans, including what documentation to provide with the application. Below we highlight some key elements of this along with eligibility requirements for these loans. The SBA Portal to accept these second draw applications is expected to be open to all lenders today. If you believe you will qualify, reach out to your bank to see if their application process is open. We are also here to help you through this process. If you need assistance or guidance, reach out to your WR Partner, your WR relationship manager, or you can email our COVID-19 task force.
Maximum Loan Amount
Equal to 2.5 times the company’s average monthly payroll up to $2 million. (3.5 times average monthly payroll for business with NAICS codes starting with 72, like hotels and restaurants.)
Borrower Eligibility Requirements
For a for-profit business, gross receipts generally are all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses. These terms carry the definitions used and reported on IRS tax return forms.
Gross receipts do not include the following:
All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.
Documentation Needed to Substantiate Reduction
The following are the primary sets of documentation Applicants can provide to substantiate their certification of a 25 percent gross receipts reduction (only one set is required):
If you have questions or would like to strategically discuss your situation relative to any of these items, we are here to help. Reach out to your WR Partner or your relationship manager. You can also email our COVID-19 task force for assistance.