The other 40% can be spent on the following non-payroll expenses:
What funds can be used forīusinesses must spend at least 60% on payroll costs to get a second-draw PPP loan forgiven. It’s strongly advised to work with an accountant or financial advisor when calculating your loan amount to ensure it is correct. Notably, potential borrowers in the Accommodation and Food Services sector (most bars and restaurants would fall under this designation) can apply for 3.5 times the average monthly 2019 or 2020 payroll costs, up to $2 million. Calculating the size of your second-draw PPP loanįor most businesses, the maximum loan amount businesses can apply for is 2.5 times the average monthly 2019 or 2020 payroll costs, up to $2 million.
Both the government and lenders involved with PPP are not allowed to charge any fees for processing these loans.īusinesses that qualify for second-draw PPP loans should first contact whatever bank, credit union or fintech company they used to secure their first PPP loan. Second-draw PPP loans mature after five years. The “covered period” for the loan is between 8 and 24 weeks, and the period generally begins the day the loan funds are disbursed. Like other PPP loans, the interest rate for all second-draw PPP loans is set at 1%, and no personal guarantee or collateral is required. The maximum loan size for a second-draw PPP loan is $2 million, versus $10 million for a first-time PPP loan. (The SBA defines “gross receipts” as all revenue “including from the sales of products or services, interest, dividends, rent, royalties, fees, or commissions.”)
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The business must have previously received a PPP loan and used the full amount only for authorized uses.To qualify, companies must meet the following criteria: Ultimately, this means the second-draw loans are much more targeted. The second-draw PPP’s purpose is to offer financial assistance to businesses that were hit especially hard by COVID-19 disruptions. What businesses are eligible for second-draw PPP Here are six things companies need to know about second-draw PPP loans. The terms and restrictions for second-draw PPP loans are not the same as for first-time PPP loans, so businesses should be well aware of the changes before applying. Applications for second-draw PPP loans will be open until May 31, 2021, or until the money allocated for the program runs out. In 2021, many of those same businesses now have the opportunity to apply for a forgivable second-draw PPP loan, which can provide more short-term assistance.įollowing new coronavirus stimulus legislation passed in December 2020, the Small Business Administration (SBA) began accepting applications for second-draw PPP loans on January 13, 2021. businesses as a way to help them make it through the coronavirus crisis. In 2020, the federal government’s Paycheck Protection Program (PPP) provided forgivable loans to more than 5 million U.S. For more information on other grants, loans and programs available to small businesses, please see these articles:ģ0+ Grants, Loans and Programs to Benefit Your Small BusinessĪ Practical Guide to Funding Your Small Business with Business Loansįor more on stimulus aid still available, see our main story here. PPP applications are no longer being accepted. Updated 6/1/21: The PPP loan application portal is closed. Following new coronavirus stimulus legislation passed in December 2020, the SBA began accepting applications for second-draw PPP loans on January 13, 2021.
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