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#2253969 - 05/14/21 08:53 PM PPP loans and reduced revenue in 2020
Lori01 Offline
100 Club
Joined: Jan 2007
Posts: 145
VT
Round two PPP loans asks the borrower to show they have had a reduction in revenue of at least 25%. In some cases this might bring a company below the $1 million mark, but not sure if the PPP SBA application is enough to document that.

Here's an example: a company in 2019 had revenue of $1.1 million. Their new PPP application shows in Q2 2019 their revenue was $260,000 and then in Q2 2020 the revenue for the period same was $75,000. They don't provide 2020 complete tax returns and there is nowhere on the PPP application to provide their total revenue for 2020.
Would you use revenue code 1 for under $1 million? or stick with code 2 based on 2019 pre COVID revenue?

Different example: You don't have prior knowledge of the companies revenue. The PPP application shows their Q2 2019 revenue was $150,000 and their Q2 2020 revenue is $$75,000. Quarterly payroll is $33,000. From this information it's clear this is a business with less than $1 million in revenue, but is this information enough to prove it?

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CRA
#2254001 - 05/17/21 02:51 PM Re: PPP loans and reduced revenue in 2020 Lori01
COMPL101TX Offline
Member
Joined: Apr 2018
Posts: 86
Since it's supposed to be gross annual revenue, we are not relying on the quarterly revenue they provided for PPP purposes. We are however, getting all Lenders to obtain the actual gross annual revenue from their borrowers on all PPP loans, even after the loan has been originated.

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#2254080 - 05/18/21 08:21 PM Re: PPP loans and reduced revenue in 2020 Lori01
Len S Online
Diamond Poster
Joined: Oct 2004
Posts: 1,915
Connecticut
Get the GAR! It's of great importance to the Bank and of little consequence to the borrower. You don't even need a full set of financial statements. Simply ask for the GAR as part of the application. The requirement has nothing to do with the profitability of the borrower so full financials are not that important. The regulation says you can rely on statements by the borrower. You don't need audited statements for CRA purposes.
Last edited by Len S; 05/18/21 08:24 PM.
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#2254081 - 05/18/21 08:27 PM Re: PPP loans and reduced revenue in 2020 Lori01
Mel in WA Offline
Diamond Poster
Joined: Mar 2013
Posts: 1,161
See my question about getting the GAR in the post below. How does that work with 2020 data and forgiveness?

https://www.bankersonline.com/forum/ubbthreads.php/topics/2249302/ppp-loan-and-gar#Post2249302

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