What is the PPP Second Draw?

The new bill passed by Congress provides a second loan from the Paycheck Protection Program, called a PPP Second Draw Loan specifically for smaller and harder-hit businesses. The maximum loan amount is $2 million. Here are other notable takeaways:


  • Businesses with fewer than 300 employees.
  • Businesses that have used or will use the full amount of their first PPP.
  • You must demonstrate at least a 25% reduction in gross receipts in any one quarter of 2020 relative to the same 2019 quarter.
  • Limited to businesses, some non-profit organizations, certain housing cooperatives, self-employed individuals, sole proprietors, and independent contractors.

Amounts Available:

As was the case with the original PPP, actual loan amounts will be based on an applicant’s payroll.

  • Loans are in amounts of 2.5x average monthly payroll costs in the one year prior to the loan or the calendar year (up to $2M).
  • New entities may receive loans of up to 2.5x the sum of their average monthly payroll costs.
  • Businesses in industries assigned to NAICS code 72 (hotels and restaurants) may receive loans of up to 3.5x average monthly payroll costs.

Loan Forgiveness:

  • Borrowers are still required to spend at least 60% of the funds on payroll over a covered period of either 8 or 24 weeks to receive full forgiveness.
  • The other 40% may be used on eligible costs, including certain mortgage expenses, rent and utility payments.

Covered Costs Extended:

Under the renewed program, the list of eligible non-payroll expenses has been expanded to include new categories, such as:

  • Other employee-provided group insurance benefits. This includes group life, disability, vision, or dental insurance.
  • Payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage costs include costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.

In addition to Second Draw Loans, the SBA is reopening SBA is reopening the Paycheck Protection Program (PPP) for First Draw Loans the week of January 11, 2021. First Draw PPP Loans can be used to help fund payroll costs, including benefits. Only those who did not receive a loan in the spring/summer of 2020 are eligible. The SBA provides overviews for each of the loans below.

Apply Now:

If you wish to begin preparing your application, you can download the following PPP borrower application forms and submit them to us here.

For those that wish to use gross income from the Schedule C (sole proprietors, independent contractors, self-employed), please complete these forms.


Want a more in-depth review? Watch the recording of our virtual PPP Second Draw Q&A session with Fourth Capital CEO, Brian Heinrichs.


 3 months ago by Fourth Capital

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