Who can apply for second PPP?

PPP second draw starts on January 13th. Similar to first PPP loans, small businesses can apply for second PPP loans through their banks.

Who’s Eligible

Borrowers are eligible for a second-draw PPP loan of up to $2 million, provided they meet the below conditions.

  • Revenue needs to have decreased at least 25% in 2020 compared to the same quarter in 2019. For example: Q2 2020 (April, May, June 2020 Revenue) vs Q2 2019 (April, May, June 2019 Revenue) must have decreased 25% Year Over Year. One quarter is a minimum. Revenue reduction can also be the full calendar year of 2020 vs 2019.
  • Used or will use the full amount of their first PPP loan on or before the expected date for the second PPP loan to be disbursed to the borrower. The borrower must have spent the full amount of the first PPP loan on eligible expenses.
  • Business was in operation on February 15, 2020 and has not permanently closed.
  • Has 300 or fewer employees.

Second PPP Loan Amount

  • Maximum loan amount for second round is $2 million.
  • Loan amount for most businesses will 2.5X average monthly payroll.
  • Restaurants, hotels, and other businesses categorized under NAICS code 72, will be eligible to receive 3.5x their average payroll.
  • Payroll can be calculated 3 ways: (1) 2019 calendar year, (2) 2020 calendar year, (3) past 12 months.

Documentation Requirement

  • Loans under $150,000 do not require revenue reduction documentation (tax forms, financial statements, bank statements) at the time of application, but they will be required for forgiveness.
  • No additional documentation will be required for second draw loans if the applicant used the full calendar year 2019 for the first draw and the second draw loan lender is the same as the first draw.
  • For loans above $150,000, applicants must submit documentation to substantiate a revenue reduction of 25% or more (tax forms, financial statements, bank statements).

Tax Treatment for PPP Loans

  • Forgiven PPP loans will be completely tax-free, and any usually-tax-deductible business expenses that are paid for with PPP loans will also continue to be deductible.

Loan Forgiveness

The loan amounts will be forgiven as long as:

  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
  • Employee and compensation levels are maintained.
  • For loans under $150,000 borrower can use simplified one-page PPP forgiveness application. Revenue reduction documentation will be required at the time of loan forgiveness if not provided at the time of application.

Additional Resources

Treasury PPP loan information

Second PPP Application Form (as of 1/11/2021)