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Twenty-five: The Percentage to Know for PPP-2

Jan 5, 2021 11:30:00 AM Cheryl Coyle QuickBooks, Small Business, Bookkeeping, Professional Services, loan

ppp2 loan

Now that specifics are out for the second Paycheck Protection Program (PPP) round, there are some important things you need to know. One is the 25% loss in receipts rule.

25% Loss of Revenue Requirement

In order to receive a second PPP loan, your business must demonstrate they have experienced a decline of 25% or more in gross receipts from the same quarter in 2019. In other words, if you your gross receipts in the third quarter of 2020 were 25% less than the third quarter in 2019, you qualify for a second loan. Even if you earned more in quarters one, two, and four, you still qualify based on the decrease in the third quarter.

The 25% Test - Generate this Report

How do you figure out if you meet the criteria? We took the work out of it for you and created a report in QuickBooks. To generate the report, you need to:

  1. Open your QuickBooks Online file
  2. Copy the link below and copy the URL into your browser and press enter


Other Important Changes

In addition to the reduction in gross receipts, previous PPP loan borrowers can apply for an additional loan of up to $2 million, if they also meet the following requirements:

  • Have 300 or fewer employees
  • Have used, or will use, all proceeds from their first PPP loan

The Nitty Gritty

In addition, the following stipulations apply to this round of PPP loans:

  • The PPP-2 loans cannot exceed $2 million.
  • The loan is based on 2.5 x average monthly payroll costs in one year prior to loan or calendar year 2019. If you have a NAICS code starting with 72 (i.e., hotels and restaurants), the loan is based on 3.5 x average monthly payroll costs.
  • Similar to the first round of PPP loans, eligible spending must be comprised of at least 60% on payroll costs (compensation, health, retirement and state and local payroll taxes) over a Covered Period of either 8 or 24 weeks.

Other Good News

PPP-2 will permit:

  • First-time borrowers with 500 or fewer employees that are eligible for other SBA 7(a) loans
  • Loans for sole proprietors, independent contractors, and eligible self-employed individuals
  • Not-for-profits (including churches)
  • Additional covered expenses such as personal protection equipment and modification to facilities (think barriers, floor stickers, air filtration, etc.)
  • Operating costs such as software, cloud computing services, and accounting needs
  • Costs related to property damage from vandalism and looting in 2020 are covered expenses
  • Expenses paid with PPP monies are tax deductible in addition to being forgiven
  • EIDL advances will not reduce your PPP forgiveness amount
  • Simplified forgiveness application is now available for loans $150,000 or less and require little in the way of documentation

In Summary

In the simplest terms, if you experienced a loss of at least 25% in gross receipts in one quarter, have 300 employees or less, AND have used all of the proceeds from your first PPP loan, you qualify for a second PPP loan.

Need Help?

We can help you navigate the PPP-2 process or assist you in applying for forgiveness from your first PPP loan. Reach out to us at to get started.

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Cheryl Coyle

Written by Cheryl Coyle