The SBA has issued further guidance on how you validate your gross receipts reduction for your second round PPP applications.  After reading it, I have changed my opinion about requiring you to match your accounting (accrual or cash) to your tax return.

The guidance says that you have to base your request on the accounting system that you use.  You can essentially use cash or accrual – as long as it is the same for each period.  You CANNOT submit an accrual report for one year and a cash report for the other year.

You have one of three choices:

  • Provide quarterly financial statements. If the financial statements are not audited, you must sign and date the first page of the financial statement and initial all other pages, attesting to their accuracy. If the financial statements do not specifically identify the line item(s) that constitute gross receipts, the Applicant must annotate which line item(s) include gross receipts.
  • Provide quarterly or monthly bank statements for the entity showing deposits from the relevant quarters. You must annotate, if it is not clear, which deposits listed on the bank statement constitute gross receipts (e.g., payments for purchases of goods and services) and do not (e.g., capital infusions).
  • There is an option to provide annual tax returns, which I can’t imagine anyone will possibly do – it’s too complicated.

Keep in mind that if your PPP application is for under $150K, you do not have to provide this information at application – but will when you apply for forgiveness.