What You Need To Know About Second-Draw PPP Loans!

The Paycheck Protection Program has been reestablished with $137 billion for second draw loans for still struggling small business owners.  Second-draw PPP loans are open to businesses that applied for the first round of money back in the spring of 2020.  PPP loans look to create a second infusion of money to small businesses that are still struggling with the ongoing economic impact that the COVID-19 pandemic has produced. Application for second- draw PPP loans are through community financial institutions (links below to find a lender or talk to your banker).


Some of the loan highlights include:

  • Apply for up to $2 million for eligible expenses.
  • 1% annual percentage rate with maturity of 5 years
  • Up to 100% can be forgiven if used for designated expenses while maintaining salaries and headcount for the covered period.
  • No collateral or personal guarantees are required.
  • SBA reopened on January 13, 2021 for the 2nd round once the money is gone its gone so you may want to apply earlier.
  • While $284 billion is set aside, $25 Billion is being set aside to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less in low- or moderate-income neighborhoods. And $60 million of that is set aside for businesses that did not get a loan the first time.
  • Funds can be used to pay for salaries, 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.
  • For most borrowers, the maximum loan amount for the 2nd draw is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million.  For borrowers in the accommodation and food services sector the maximum loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million


Who may qualify for second round of PPP?

  • 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.
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Where to apply:

  1. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/first-draw-ppp-loans
  2. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans


Good luck and here is to a great 2021! We encourage you to get with your banker and CPA for assistance.  Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here.



Advisory services offered through Capital Asset Advisory Services, LLC, a Registered Investment Advisor. This material has been prepared for informational purposes.