Guide to understanding the Revenue Reduction Score for Second Draw PPP Loans

Now that the Paycheck Protection Program’s (PPP) loan forgiveness is underway, the U.S. Small Business Administration is making changes to its forgiveness process to help streamline the review of revenue reduction documentation. 

While small businesses await further guidance from the agency, here are some key things to keep in mind as you navigate the PPP loan forgiveness process.

Revenue Reduction Score (RRS): What is it?

The Revenue Reduction Score, developed by an independent SBA contractor, is a score based on a variety of inputs, including industry, geography, and business size, and current economic data on the economic recovery and return of businesses to operational status. The score serves as an alternative form to document the borrower’s revenue reduction. 

How will the SBA use the RRS?

Each second draw PPP loan of $150,000 or less will be assigned an RRS score, which will be maintained in the PPP Direct Forgiveness Portal and will be visible to lenders to use on an optional basis as an alternative to document revenue reduction. Additionally, the score will be visible to borrowers who submit their loan forgiveness applications through the direct forgiveness portal.

What is the PPP Direct Forgiveness Portal about and how does it relate to the RRS?

The PPP Direct Forgiveness Portal is SBA’s new platform where it will accept PPP loan forgiveness applications from borrowers with loans of $150,000 or less, and is currently operating under an invite-only period. The portal, in conjunction with the RRS, are the SBA’s most recent strategies to streamline the PPP loan forgiveness process and accelerate revenue loss verification.

How will it affect my PPP loan forgiveness application?

When the score meets or exceeds the value required to validate a borrower’s revenue reduction, the score will satisfy the Second Draw revenue reduction requirement of 25%. But if the score does not meet the value required to validate the borrower’s revenue reduction, and if the borrower has not already provided documentation to the lender that validates the borrower’s revenue reduction, the borrower must provide documentation either directly to the lender (for those lenders that do not opt-in to the PPP direct forgiveness portal) or provide documentation to the lender by uploading it to the PPP direct forgiveness portal. 

Stay tuned for more information about the Revenue Reduction Score and other SBA updates on the PPP loan forgiveness process.

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