On January 6, 2021, the U.S. Small Business Administration released initial details and guidelines for the updated Paycheck Protection Program (PPP) Second Draw Loans. The full text of the guidelines can be found here. Second Draw Loans will be made to borrowers who already received loans in round one of the 2020 PPP process.

Final guidance has been issued, but the application has not yet been made available and banks will not be able to enter applications until January 13th at the earliest. We are monitoring for the application to be released and will make it available when the SBA publishes the document.

Below are some notable parameters we’re aware at this stage:

  • Maximum loan size for this round is $2 million.
  • Business may have no more than 300 employees
  • Business demonstrated a reduction in gross receipts of at least 25 percent in any quarter in 2020 relative to the same quarter of 2019.
    • Revenue reduction can also be the full calendar year of 2020 vs 2019.
  • Payroll is 2.5x of the average payroll based off one of the following:
    • 2019 calendar year,
    • 2020 calendar year, or
    • past 12 months
  • Businesses classified in NAICS code 72 (generally, accommodation and food services) will be eligible to receive 3.5x of their average payroll.
  • Applicants must have utilized the full amount of their 2020 PPP loan on or before the expected date of the second draw PPP loan is disbursed.
  • All applicants must submit documentation to substantiate a revenue reduction of 25% or more (i.e. tax forms, financial statements).
    • Loans under $150,000 do not require this documentation at the time of application but will be required for forgiveness.
  • Payroll documentation required in the first draw will be the same for second draw loans.

We’ll continue to share updates as they become available. If you have any questions, please reach out to your Relationship Manager to help you navigate the process.