The Small Business Administration, along with the U.S. Treasury Department, reopened the Paycheck Protection Program for the First Draw PPP Loans the week of Jan. 11, with applications for Second Draw PPP Loans accepted starting Jan. 13. 

The SBA says they will only accept Second Draw PPP Loan applications from participating community financial institutions to promote access for smaller lenders and their customers. These include Community Development Financial Institutions, Minority Depository Institutions, Certified Development Companies, and Microloan Intermediaries. 

SBA says the PPP lending will reopen to all participating lenders shortly after. 

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. 

Click here to be matched with qualified PPP Lenders using SBA Lender Match

Loan details

The PPP now allows certain eligible borrowers that previously received a PPP loan to apply for a second draw PPP loan with the same general terms as their first draw, according to the SBA. 

Second draw PPP loans can be used to help fund payroll cost, including benefits, 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 operation. 

The SBA says for most borrowers, the maximum loan amount of a second draw is 2.5 times the average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the SBA says the maximum loan amount for the second draw is 3.5 times average monthly 2019 or 2020 payroll costs up to $2 million. 

Who qualifies?

The SBA says a borrower is generally eligible for a second draw PPP loan if:

  • 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

How and when to apply

The SBA says you can apply for a second draw PPP loan from Jan. 13, 2021, until March 31, 2021. 

SBA says it will initially only accept second draw PPP loan applications from participating community financial institutions and all second draw PPP loans will have the same terms regardless of lender or borrower. 

Click here to begin preparing your application. 

Click here to see more about SBA and the second draw PPP loan application