Second Draw of PPP Loans

Your First Draw PPP Loan is almost gone? You may now apply for a Second Draw PPP Loan!

Upon consulting with the U.S. Treasury Department. the Small Business Administration (SBA) started accepting new applications for the Second Draw PPP Loans on January 13, 2021. The SBA has allocated a total of $284 billion for these loans.

Here are some important things you have to know about the Second Draw Loans, which are slightly different from the funds which were available in 2020:

  • The Second Draw PPP Loan has expanded eligibility for nonprofits, travel, and media companies. 
  • The funds are dedicated to small businesses, community leaders, and minority depository institutions. 
  • Recipients of the loan are eligible for Employee Retention Credit under certain conditions. 
  • PPP forgivable expenses are tax-deductible.

Now, let’s take a look at how the Second Draw works!


Second Draw Loan Details

A Second Draw PPP Loan may now be applied for by certain borrowers who have already received a PPP loan. The loan terms for the Second Draw will be the same as their First Draw. The Paycheck Protection Program will determine the borrowers’ eligibility, and we will discuss it later.

Borrowers with granted Second Draw PPP Loans may use the fund to help with payroll costs, rent, utilities, mortgage interest, and other benefits. It can now also be used to pay for new expenses such as COVID-19-related worker protection costs, uninsured property damage costs due to looting and vandalism from the previous year, supplier or vendor costs for essential goods, and operating expenses for computing services related to HR and payroll processing.

However, 60% of the funds must be used for payroll costs.

Hospitality and restaurant businesses will be eligible for a higher maximum loan amount and increased assistance. Borrowers from the Accommodation and Food Services sector may receive a maximum loan amount for the Second Draw PPP Loan equal to 3.5x the average monthly payroll in 2019 or 2020, up to $2 million. For other borrowers, their maximum loan amount is only 2.5, the average monthly payroll in 2019 or 2020, but up to $2 million. Check the NAICS 72 to confirm your business’s classification.


Qualification Details

These are the general requirements for a borrower to be eligible for the Second Draw PPP Loan:

  • Previously received a First Draw PPP Loan and used up or will use up the full amount of the first loan under authorized uses
  • Has 300 employees or less
  • Experienced at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020


Application Process

The Second Draw PPP loan application is from January 13, 2021, until March 31, 2021. The Small Business Administration is now accepting applications for the Second Draw from participating lenders. You may use Lender Match, a free online tool, to find SBA-approved lenders. You can also look for lenders near you using this map.

Take note that all Second Draw PPP Loans will have identical terms no matter who the lender or borrower is.

To start with your application, you can download the PPP borrower application form on the link below. You must fill out the necessary information requested if you wish to apply with a lender.

Paycheck Protection Program Second Draw Borrower Application Form

There are also other forms you may need to complete. We are attaching download links here so you can access them easily.

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