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Paycheck Protection Program Second Draw Loans — Treasury Overview

Summary

This is a Treasury overview titled Paycheck Protection Program Second Draw Loans. It says the Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. It says a borrower is generally eligible if it previously received a First Draw PPP Loan and 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. For most borrowers the maximum loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million, and 3.5x for Accommodation and Food Services businesses, with applications accepted until March 31, 2021.

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“Paycheck Protection Program Second Draw Loans — Treasury Overview.” Original at home.treasury.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/department-of-the-treasury-top-line-overview-of-second-draw-ppp-1-8-20-a01144e18d/, SHA-256 13bd08f575593bea4dcfabc26d109f9a607636748926a8e91d140d8ec47e470f.

Full text

             PAYCHECK PROTECTION PROGRAM SECOND DRAW LOANS
The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously
received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as
their First Draw PPP Loan. Second Draw PPP Loans can be used to help fund payroll costs,
including benefits. Funds can also be used to pay 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.
                                      Full Forgiveness Terms
Second Draw PPP 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 percent of the proceeds are spent on payroll costs.
                                       Targeted Eligibility
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
   • Previously received a First Draw PPP Loan and will or has used the full amount only 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.
                                  Maximum Loan Amount and
            Increased Assistance for Accommodation and Food Services Businesses
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 (click HERE 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.
                                     How and When to Apply
Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing
SBA 7(a) lender or through any federally insured depository institution, federally insured credit
union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP.
All Second Draw PPP Loans will have the same terms regardless of lender or borrower. A list
of participating lenders as well as additional information and full terms can be found HERE.
                                     Ensuring Access for All
SBA continues to call upon its lending partners, including Community Development Financial
Institutions (CDFIs) and Minority Depository Institutions (MDIs), to redouble their efforts to
assist eligible borrowers in underserved and disadvantaged communities. At least $25 billion is
being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10
employees or for loans of $250,000 or less to eligible borrowers in low- or moderate-income
neighborhoods. To promote access for smaller lenders and their customers, SBA will initially
only accept Second Draw PPP Loan applications from community financial institutions starting
on January 13, 2021. The PPP will open to all participating lenders for Second Draw PPP
Loans shortly thereafter.
  Visit www.sba.gov or www.treasury.gov for more information and details, including the
                                 comprehensive program rules.

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