On December 27, 2020, the Paycheck Protection Program (PPP) Second Draw Program was signed into law. The PPP Second Draw provides small businesses the opportunity to apply for a second low-interest, forgivable loan that can be used for:
- Payroll costs, including benefits
- Worker protection costs related to COVID-19
- Uninsured property damage caused by looting/vandalism in 2020
- Some supplier costs and operation expenses
Borrowers can receive a loan amount of 2.5 times their average monthly payroll for 2019 or 2020 payroll costs, not to exceed $2 million. However, 60% of the loan must be used on payroll costs, and employee and compensation levels must be maintained in the same manner as required for the PPP First Draw loan. Entities in industries whose NAICS code begins with 72 (Accommodation and Food Services) may receive loans up to 3.5 times their average monthly payroll costs.
PPP Second Draw Eligibility
The Small Business Administration (SBA) released the program guidelines, which include some changes from the previous round.
Eligible businesses must:
- Have been in operation as of February 15, 2020
- Have no more than 300 employees
- Have used or will use the full amount of their first PPP
- Demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020; you will be required to provide financial statements for the two quarters (new qualification)
- Have completed and submitted your first-round PPP forgiveness application to the SBA
To make the application process as simple as possible for you, we have established an online application for the PPP Second Draw. Available funds for the program are limited, and the application window closes on March 31, 2021, so contact us today to apply.