Overview of Second Draw Loans

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Full Forgiveness Terms for Second Draw Loans

To receive maximum loan forgiveness, borrowers must spend at least 60% of their Second Draw PPP loan on eligible payroll costs, and no more than 40% on eligible non-payroll costs. For purposes of loan forgiveness, the borrower will have to document the proceeds used for payroll costs in order to determine the amount of forgiveness.


Other permissible costs (other eligible non-payroll costs) include:

  • Covered operations expenditures: “Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses”
  • Covered property damage costs: Costs related to “property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation”
  • Covered supplier costs: Payments made to suppliers of goods pursuant to contracts, orders, or purchase orders in effect before the covered period (or, for perishable goods, in effect before or during the covered period), for the supply of goods that “are essential to the operations of the borrower at the time at which the expenditure is made”
  • Covered worker protection expenditures: Expenditures made to help the business comply with federal, state, or local requirements or guidelines related to worker and customer safety amid COVID-19, such as the purchase of PPE or facility modifications such as ventilation and filtration systems, physical barriers, and screening capabilities; see Page 50 of the IFR for additional details and examples
  • Certain employer-provided group insurance payments: “Costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums”

Eligibility for PPP Second Draw Loans

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;
    • Note: borrowers are not required to have received forgiveness for their First Draw PPP Loan prior to receiving a Second Draw Loan.
  • Has no more than 300 employees; and
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.


The following are examples of borrowers that would be excluded from a Second Draw PPP Loan:

  • Publicly traded companies
  • Household employers (i.e. individuals employing nannies or housekeepers)
  • Businesses that are permanently closed
  • Businesses that have received or will receive a Shuttered venue Operator grant
  • Any prospective borrower that engaged in any activity that is illegal under federal state or local law is not eligible
  • Applicants currently in bankruptcy

Maximum Loan Amount and Increased Assistance for Accommodation and Food Services Businesses for Second Draw Loans

For most borrowers, the maximum loan amount of a Second Draw PPP Loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (click HERE for NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP Loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

How and When to Apply for Second Draw PPP Loans

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Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP. All Second Draw PPP Loans will have the same terms regardless of lender or borrower.

Ensuring Access to Second Draw Loans for All

The Paycheck Protection Program re-opened on January 11, 2021 and at least $15 billion is being set aside for First Draw 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. FAQs about PPP Loans for underserved businesses.