Paycheck Protection Program (PPP) Second Draw
The Paycheck Protection Program (PPP) is a forgivable loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
- Must be a business, certain non-profit organizations, housing cooperatives, veterans’ organizations, tribal businesses, self-employed individuals, sole proprietors, independent contractors, and small agricultural co-operatives;
- Must have been in business as of February 15, 2020;
- Employ no more than 300 employees cumulative of all locations;
- NAICS code 72 (Accommodations and Food Services) and eligible news organizations 300 employees by physical location
- Received and have used or will use the full amount of their first pull PPP by PPP second pull disbursement on eligible expenses;
- Demonstrate at least a 25% reduction in gross receipts Q1, Q2, Q3, Q4 2020 relative to the same 2019 quarter;
- And have not or will not receive a Shuttered Venue Operator Grant.
- Loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year.
- Entities in NAICS code 72 (Accommodations and Food Services) may receive loans of up to 3.5X average monthly payroll costs.
- No loan can be greater than $2 million
- No collateral required
- 1% Interest rate
- 5 year maturity
- Payroll – salary, wage, vacation, parental, family, medical, or sick leave, health benefits
- Mortgage interest – as long as the mortgage was signed before February 15, 2020
- Rent – as long as the lease agreement was in effect before February 15, 2020
- Utilities – as long as service began before February 15, 2020
- Operations expenditures – Payment for any software, cloud computing, and other human resources and accounting needs.
- Property damage costs – Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
- Supplier costs – Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made.
- Worker protection expenditure – Personal protective equipment and adaptive investments to help a loan recipient comply with health and safety guidelines related to COVID-19. This includes costs associated with outdoor dining.
- Employer-provided group insurance benefits- Clarity provided that benefits will be included in payroll costs for the first and second draw. This includes group life, disability, vision, or dental insurance.
- A $15 billion set-aside (initial and second draw) for lending through community financial institutions, including CDFIs and MDIs was established to increase access for minority-owned and other underserved small businesses and nonprofits.
- A $15 billion and $25 billion for first draw and second draw PPP loans, respectively, set aside was created for borrowers with a maximum of 10 employees or for loans less than $250,000 to borrowers in low-or moderate-income neighborhoods.
- An EIDL Advance is no longer subtracted from the PPP forgiveness amount.
- Forgiven PPP loans will not be included in taxable income. Deductions are allowed for expenses paid with proceeds of a forgiven PPP loan. The same applies to EIDL grants and certain loans and loan repayment assistance.