Second-Draw PPP Loans – Who Qualifies & How to Apply

Update 3/31/2021: The application deadline for both first and second round PPP loans has been extended to May 31st, 2021, giving business owners two extra months to apply.

The U.S. Small Business Administration (SBA) has officially opened its doors for the second round of Paycheck Protection Program (PPP) Loan applications. As we’ve covered previously, PPP loans can give struggling businesses some needed breathing room during the COVID-19 pandemic.

If you missed the first round of loans back in March of 2020, that means you’re still able to apply for a First Draw PPP Loan during this second round. For more information on First Draw loans, check out our Complete Guide to PPP Loan Forgiveness.

If your business already received a First Draw loan, here’s what you need to know to apply for a Second-Draw PPP Loan.

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Which Businesses Qualify for Second-Draw PPP?

A business is eligible for a Second-Draw PPP Loan if the business:

  • Has already received a First-Draw PPP Loan and either will use, or has used, the full amount — only for authorized uses,
  • Has no more than 300 employees,
  • And can demonstrate at least a 25-percent reduction in gross receipts between comparable quarters in 2019 and 2020.


How Do PPP Loans Work?

Just like the previous round of PPP Loans:

  • All small businesses are eligible, as are sole proprietorships, individual contractors, and other self-employed individuals.
  • The loans cover expenses for eight weeks.
  • The loan has a maturity rate of two years and an interest rate of one percent.
  • No payments are required for the first six months.
  • The loan can be 100-percent forgiven.

Your loan amount can cover up to 2.5x your average monthly payroll cost, with a cap at $2 million.


Other Key Details:

  • Second-round PPP Loans cannot exceed $2 million. If this is your second PPP loan, the combined total of your two loans cannot exceed $10 million.
  • Restaurants and food businesses are eligible for loans covering 3.5x their monthly payroll costs, as opposed to the 2.5x mark for all other businesses.
  • Second-round loans are only forgivable if they’re spent 60 percent on payroll costs.
  • Both the original and second-round PPP loans cannot be taxed when forgiven. This means you can still record your qualifying expenses as deductions on your 2020 tax return.
  • Loans of less than $150,000 can use a simplified forgiveness application.

To learn more about what conditions apply to PPP Loans, and how they can be completely forgiven, check out our Complete Guide to PPP Loan Forgiveness.


How to Apply for Second-Draw PPP Loans

The SBA will accept First and Second-Draw PPP Loan applications until May 31, 2021. To apply, you can find an eligible lender through the SBA’s Lender Match portal. Once you’ve found an eligible lender, fill out this form and send it to your lender.

If you meet the SBA’s requirements, you can expect your Second-Draw PPP money to arrive soon after applying.


Contact Boxelder for Any Questions

Applying for PPP Loans can be a stressful, confusing process. If you have any questions at all, give us a call at 303-317-6111 for a free consultation. We’ve already helped many of our clients receive the PPP money they need. Our team of licensed professionals is ready to assist you.

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About the Author

A company founder standing by Colorado's Front Range

Tom Conradt

Co-Founder, IRS Collections Defense Attorney

Tom Conradt is the co-founder of Boxelder Consulting & Tax Relief, and has been practicing IRS Collections defense law for the past ten years. Graduating from the University of North Carolina at Chapel Hill, Tom is the lead IRS Collections Defense Attorney and heads the tax resolution department. Tom’s favorite part about working at Boxelder Consulting is hearing about the relief that clients experience after they sign up and start seeing immediate results on their case. Tom enjoys all the outdoor activities Colorado has to offer, including skiing, hiking and climbing. He is also looking forward to the return of indoor pickup basketball.

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