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Paycheck Protection Program: How to calculate if your business experienced at least a 25% revenue decrease

According to SBA guidance, your business qualifies for a second PPP loan if it had at least a 25% decrease in revenue in a quarter in 2020 relative to a quarter in 2019 (or in the year 2020 as compared to 2019). Here’s how you can see if your business meets this requirement. 

You should account for all gross receipts or revenue in whatever form received or accrued. Gross receipts is the total amount of revenue your business has received or accrued in a given period.

OPTION 1

Compare annual gross receipts

Subtract your 2020 gross receipts from your 2019 gross receipts, and divide that amount by your 2019 gross receipts. If the number is 0.25 or greater, then your business can demonstrate a 25% decrease in annual revenue.

EXAMPLE CALCULATION

2019 gross receipts              $80,000

2020 gross receipts            -$60,000

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Decrease amount                  $20,000

2019 gross receipts           ÷ $80,000

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Percentage decrease               25%

OPTION 2

Compare quarterly gross receipts

Subtract the gross receipts of any quarter of 2020 from gross receipts from the same quarter of 2019, and divide that amount by the gross receipts of your chosen quarter of 2019. If the number is 0.25 or greater, then your business can demonstrate a 25% decrease in revenue.

EXAMPLE CALCULATION

Q2 2019 gross receipts              $20,000

Q2 2020 gross receipts            -$15,000

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Decrease amount                        $5,000

Q2 2019 gross receipts           ÷ $20,000

-----------------------------------------

Percentage decrease                        25%

FREQUENTLY ASKED QUESTIONS

What are gross receipts?

The IRS defines gross receipts as “all revenue in whatever form received or accrued 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.” 

Gross receipts do NOT include the following:

  • The forgiveness amount of your first PPP loan or any EIDL Advance amount;
  • Taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers (this does not include taxes levied on the business or its employees); 
  • Proceeds from transactions between a business and its domestic or foreign affiliates; and 
  • Amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker. 

Learn more from the SBA >

Why can’t Square calculate this based on my processing  data?

According to SBA guidance, the SBA will not accept payment processing data as proof of reduction in revenue. 

What if I wasn’t operational in all or any of 2019?

  • If your business wasn’t in operation during the first and second quarters of 2019 but in operation during the third and fourth quarters of 2019, you must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than during either the third or fourth quarters of 2019.
  • If your business wasn’t in operation during the first, second, and third quarters of 2019 but in operation during the fourth quarter of 2019, you must demonstrate that gross receipts in any quarter of 2020 were at least 25 percent lower than the fourth quarters of 2019.
  • If your business wasn’t in operation at all in 2019 but in operation on February 15, 2020, you must demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25 percent lower than the first quarter of 2020.

What if I’m self-employed?

  • If you are self-employed and don’t have quarterly financial statements available, you can calculate your annual revenue for a given year by referencing your Form 1040 Schedule C and adding up lines 4 and 7.

Learn more from the SBA >