Second Round of PPP Loans

On Jan. 8, the U.S. Small Business Administration announced that the Paycheck Protection Program will re-open with another round of loans.

Smaller businesses that did not receive a PPP loan the first time around can begin to apply on Jan. 11. Those who did receive one of the original loans can apply for a second PPP loan beginning Jan. 13, provided they meet eligibility requirements.

These second PPP loans are forgivable and are available on a first-come, first-serve basis, with the deadline to apply being March 31.

All loans require working with an eligible lender.

For most borrowers, the maximum of a second draw PPP Loan is 2.5 times the average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in accommodation and food services, the maximum is 3.5 times average monthly 2019 or 2020 payroll costs up to $2 million.

Key Points

• Borrowers can set their loan’s covered period anywhere from 8 and 24 weeks to meet their business needs;
• Loans will cover operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
• Eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations;
• Greater flexibility for seasonal employees;
• Certain existing borrowers can request to modify their first draw PPP loan amount; and
• Certain existing borrowers can apply for a second draw PPP loan.

A borrower is generally eligible for a second draw PPP loan if the borrower has no more than 300 employees, used the full amount of the first draw PPP loan only for authorized uses; and can demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

New PPP forms and guidance are posted at www.sba.gov/ppp .

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First Draw Forms Updated Jan. 8

1. Form 2483 – First Draw Borrower Application https://www.sba.gov/document/sba-form-2483-ppp-first-draw-borrower-application-form
2. Form 2484 – First Draw Lender Guaranty Application https://www.sba.gov/document/sba-form-2484-lender-application-form-paycheck-protection-program-loan-guaranty

Second Draw Forms Released Jan. 8

1. Form 2483-SD – Second Draw Borrower Application https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form
2. Form 2484-SD – Second Draw Lender Guaranty Application https://www.sba.gov/document/sba-form-2484-sd-ppp-second-draw-lender-application-form

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Guidance

SBA Procedural Notice 5000-20074 – Modifications to SBA Forms 3506, 3507, and 750 CA (for purposes of PPP only): www.sba.gov/document/procedural-notice-5000-20074-modifications-sba-forms-3506-3507-750-ca-purposes-ppp-only

Top-line Overview of PPP First Draw Loans: www.sba.gov/document/support-top-line-overview-first-draw-ppp

Top-line Overview of PPP Second Draw Loans: www.sba.gov/sites/default/files/2021-01/Top-line%20Overview%20of%20Second%20Draw%20PPP%20%281.8.2021%29-508.pdf

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For questions, contact Kyle Roseman, Lending Specialist, NorCal SBDC Finance Center, at kyle@norcalsbdc.org or (831) 346-6747.