Paycheck Protection Program Second Draw Application FAQs
Updated January 21, 2021
We are excited to support our existing PPP recipients who qualify for a second draw loan. They will be contacted by us directly with an invitation to submit their application.
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).
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.
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?
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.