COVID-19: Second-Draw PPP Loans

• The latest $900 billion coronavirus stimulus package, passed in late December 2020, includes $284 billion in funding towards the second-draw Paycheck Protection Program (PPP).
• Last year, the first round of funding for the PPP loan ran out in 13 days.
• Early access was only given to small lenders for the third round of PPP.

The latest $900 billion coronavirus stimulus package, passed in late December 2020, includes $284 billion in funding towards the second-draw Paycheck Protection Program (PPP). The U.S. Small Business Administration (SBA), under the CARES Act, opened applications for the third round of PPP loans on January 13 at participating community financial institutions (CFIs) and lenders with under $1 billion in assets.

Last year, the first round of funding for the PPP loan ran out in 13 days, prompting a second round in 2020. Data from the Paycheck Protection Program released on December 1, 2020, showed that thousands of minority-owned small businesses were at the end of the line in the government's coronavirus relief program. They also struggled more than white business owners to find banks that would accept their applications or were disadvantaged by the terms of the program. In response, early access was only given to small lenders for the third round of PPP loans to allow underserved and under-resourced small businesses the ability to secure funds this round after facing challenges in accessing funds during the first two rounds of the PPP.

All lenders will accept applications from January 19 through March 31, 2021.

PPP Loan Eligibility Requirements

Although many of the original rules still apply to existing PPP borrowers, there are changes that first-time and future applicants should understand before applying. Some of those rules include:

• Applicants cannot exceed $2 million for a loan ask.
• Businesses are required to have 300 workers or less.
• Show proof of at least a 25 percent decrease in revenue between 2019 and 2020.

To view a complete list of the PPP loan requirements, eligibility, and more information on how to apply, visit the SBA website.

The loans can be fully forgiven if used toward retaining employees and operating expenses like rent, mortgage interest payments, and utilities. Currently, the SBA has forgiven more than $100 billion in PPP loans.

Businesses that received funds from the "first-draw" PPP loans are eligible to receive funds from the "second-draw" PPP loans as well.

To help find funding, SBA has incorporated a free online tool that matches applicants to a participating lender.