What is it?
The Paycheck Protection Program (PPP) is now allowing certain eligible borrowers who previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw. Second Draw loans can be used to help fund:
- Payroll costs, including benefits
- Mortgage interest
- Worker protection costs related to COVID-19
- and certain supplier costs and expenses for operations.
Full Forgiveness Terms
Second Draw loans made to eligible borrowers 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% of the proceeds are spent on payroll costs
Who is Eligible
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously recieved a First Draw PPP Loan and will or has used the full amount only for authorized uses
- Has no more than 300 employees
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
Maximum Loan Amount and Increased Assistance for Accomodation and Food Service Business
For most borrowers, the maximum loan amount of the Second Draw is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.
Borrowers can apply for a loan through March 31, 2021.