Second Draw PPP-tax advisor-CPA-Skokie ILThe recently approved coronavirus stimulus bill includes a second round of the Paycheck Protection Program, designed to help small businesses hit hardest by the pandemic. Also known as the “second draw loans” here is what we know:

The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. Second Draw PPP Loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay for 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 operations.

Second Draw PPP Loans are eligible to borrowers who qualify for full loan forgiveness if during the 8- to 24-week qualification period the following loan disbursement criteria are met:

  • Employee and compensation levels are maintained in the same manner as required for the First Draw PPP loan;
  • The loan proceeds are spent on payroll costs and other eligible expenses; and
  • At least 60 percent of the proceeds are spent on payroll

A borrower is generally eligible for a Second Draw PPP Loan if the borrower:

  • 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

For most borrowers, the maximum loan amount 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 the Accommodation and Food Services industry, the maximum loan amount for a Second Draw PPP Loan is 3.5 times the average monthly 2019 or 2020 payroll costs up to $2 million.

Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing lender that is participating in PPP.  All Second Draw PPP Loans will have the same terms regardless of lender or borrower.

The new Second Draw PPP Loan is on a first come first serve basis so it’s important to act and apply as soon as it is available.  Those businesses who received a loan through the first Paycheck Protection Program but have not yet applied for forgiveness should wait to apply until after the second loan has been approved to avoid delays.

Our team of experts is well-versed in the Paycheck Protection Program. Contact us today for assistance at (847) 256-3100 or via email at

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