Second Draw PPP Loans

Updated: January 21, 2021 at 8:00 a.m.

The Paycheck Protection Program (PPP) now allows certain eligible borrowers who 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 operations expenses.

Full Forgiveness Terms

Second Draw PPP Loans made to eligible borrowers will qualify for full loan forgiveness if borrowers do these three things during an 8- to 24-week covered period following loan disbursement:

  • 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
  • At least 60 percent of the proceeds are spent on payroll costs

Second Draw Eligibility Requirements

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

  1. Previously received a First Draw PPP Loan and will or has used the full amount for authorized use.
  2. Has no more than 300 employees.
  3. Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.*

* 25% reduction is calculated by the borrower providing documentation showing a reduction in quarterly gross receipts for one quarter in 2019 compared to the same corresponding quarter in 2020. If the borrower was in operation for all four quarters in 2019, the borrower is deemed to have experienced the qualifying reduction if they experienced a reduction in annual receipts of 25% or more in 2020 over 2019.  PPP forgiveness received in 2020 does NOT constitute receipts for this calculation.   

Maximum Loan Amount

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.

What You Need to Submit to Bankers Trust

  • Borrower application
  • Documentation of annualized payroll information used to calculate loan amount (UNLESS information was provided to Bankers Trust for an initial PPP Loan and Second Draw Loan amount matches the original loan amount)
  • Tax forms or financial statements evidencing a 25% reduction in gross receipts. Financial statements should be for calendar quarters and corresponding periods of time (e.g., Q3 2019 along with Q3 2020).

Graphic depicting the key elements of a second draw PPP loan