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Paycheck Protection Program Second Draw Application FAQs



Updated March 15, 2021

We've enjoyed being part of the PPP process so far and have invited our PPP customers into the second draw loan application process.

I was billed for an SBA EIDL loan that I don’t owe. What should I do?

It’s possible that an identity thief applied for the loan using your personal or business information. The SBA has guidance about reporting the fraud, and the FTC has tips to help you clear up any credit problems it may cause. Learn more.

My application is still under review and I have more than 20 employees. Does this mean I might not get approved?

Although the SBA is not accepting applications from businesses with more than 20 employees during the two-week period which began February 24, we are continuing to process them on our end. With roughly $150 billion still available in the PPP program, we feel confident that there is sufficient funding for all eligible applicants.

My business has less than 20 employees. Do I need to do anything to make sure my application is processed during the two-week window?

We are working all of our pending second draw applications in the order they were received which will include us submitting your application to the SBA during the two-week period.

Who is eligible to apply for second draw funding?

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • Previously received a First Draw PPP Loan and has used the full amount for authorized uses;
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020 (e.g. second quarter 2019 compared to second quarter 2020). Here is a resource from the SBA for calculating revenue reduction.

How much can I receive?

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (view for NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million. The total amount of First Draw and Second Draw PPP Loans for any one borrower may not exceed $10 million.

Here is a resource from the SBA for calculating max loan amounts and what documentation you'll need to provide.

What are the second draw loan details?

All Second Draw PPP Loans have a maturity of 5 years and an interest rate of 1% per annum. Loan payments are deferred until SBA remits the forgiveness amount to the lender, or 10 months after the end of the covered period for loan forgiveness (an 8 week to 24 week period following loan disbursement, as selected by the borrower). No collateral is required, and no fees apply. 

What documentation is required for the second draw PPP loan?

The documentation requirements will be similar to those of your first draw application, and will depend on your loan amount. We are unable to transfer any documents from your first draw application and you will need to upload all the required documentation in order for your application to be processed. You will need to provide:

  • Driver’s License/State ID/Passport for all signers
  • Payroll information sufficient for demonstrating qualifying payroll amount for calendar year 2019 or 2020, which may include, as applicable payroll records, payroll tax filings, Form 1099-MISC, Schedule C or F, income and expenses from a sole proprietorship, or bank records
  • Documentation adequate to establish the required revenue reduction from 2019 to 2020 which may include tax forms, quarterly financial statements or bank statements

As always, please work with your tax preparer or accountant to obtain any required financial documentation.

How do I designate ownership of a non-profit on the second draw application?

For nonprofits, you must enter 20% ownership. The SBA recommendation is to enter the nonprofit as both the borrower and the principal.

  • Borrower ---  Business.   Name….  ABC  (nonprofit) EIN
  • Principal ----  Business    Name….  ABC (nonprofit))  20% ownership  EIN

 The nonprofit EIN will be used for both Business and Principal information.

How do I calculate the loan amount for a second draw loan?

Check out this resource from the Small Business Administration for calculating the loan amount.

What expenses are covered?

Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for certain costs for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

Are expenses paid with PPP loans tax deductible?

Otherwise deductible qualified business expenses paid with PPP loans (both first draw and second draw) are tax deductible. (Previously the IRS had ruled otherwise).

What are the PPP second draw forgiveness details?

Second Draw PPP Loans made to eligible borrowers will generally qualify for full loan forgiveness if during the 8- to 24-week covered period following loan disbursement:

  • Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan;
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • At least 60 percent of the proceeds are spent on payroll costs.

How do I apply for PPP second draw forgiveness?

A simplified PPP second draw forgiveness application has been developed. More details will be shared as they become available. 

I received an EIDL - is there anything special I need to consider?

For second draw funding, we understand that the SBA will NOT deduct any EIDL advance amount you have received from your forgiveness amount. 

I see information about applying for forgiveness on my existing loan in the portal. Should I be applying now?

If you have not been directly invited to start your forgiveness process, please wait because this process will be much easier for you soon. We'll be in touch about that soon.