PPP New Provisions and PPP Second Draw

The COVID-19 Economic Relief Package signed into law Sunday, December 27, 2020, as the Consolidated Appropriations Act, 2021, brought several new provisions to the Paycheck Protection Program (PPP) and extends the time of the program to March 31, 2021.  The new provision extending the PPP refers to this next round of PPP loans as “PPP second draw” loans.  This section covers some, but not all, of the important changes. Please contact one of our Commercial Lenders if you have questions or would like to have a discussion about the revisions to the PPP loan program. 

A provision in the Consolidated Appropriations Act, 2021, creates a second loan opportunity from the Paycheck Protection Program, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.

In order to receive a Paycheck Protection Program loan under this section, eligible entities must:

•  Employ not more than 300 employees

•  Have been in operation on 2/15/2020

•  Have used or will use the full amount of their first PPP and

•  Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Provides applicable timelines for businesses that were not in operation in Q1, Q2, and Q3, and Q4 of 2019. Applications submitted on or after January 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.

Use the following links to visit the SBA website to download PPP First and Second Draw Borrower Applications.

PPP First Draw Borrower Application 2483 (rev 3/3/21)

PPP Second Draw Borrower Application 2483-SD (rev 3/3/21)

PPP First Draw Borrower Application Schedule C Filers 2483-C (3/3/21)

PPP Second Draw Borrower Application Schedule C Filers 2483-SD-C (3/3/21)


•  Borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million.

•  Entities in industries assigned to NAICS code 72 (Accommodation and Food Services) may receive loans of up to 3.5X average monthly payroll costs.

•  Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.

•  Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.

•  Waiver of affiliation rules that applied during initial PPP loans apply to a second loan.

•  An eligible entity may only receive one PPP second draw loan.

•  Fees are waived for both borrowers and lenders to encourage participation.

•  For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application.  The form to be created by SBA will not be more than one page in length with attestations by the borrower that they have provided all information accurately and as required and complied with the PPP loan requirements.

•  Non-profit and veterans’ organizations may utilize gross receipts to calculate their revenue loss standard.

•  Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and non-payroll costs in order to receive full forgiveness will continue to apply.

•  Allows loans made under PPP before, on, or after the enactment of this act to be eligible to utilize the expanded forgivable expenses except for borrowers who have already had their loans forgiven.

•  The same terms and conditions as the first initial PPP loans remain the same.

•  Prohibits eligible entities that receive a grant under the Shuttered Venue Operator Grants from obtaining a PPP loan.

•  Gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program (PPP) loan. 

•  Clarifies that expenses paid with the proceeds of a PPP loan are deductible and the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.

•  Effective as of the date of enactment of the CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

•  Gross income does not include forgiveness of certain loans, emergency EIDL grants, and certain loan repayment assistance, each as provided by the CARES Act. 

•  Clarifies that expenses paid with the amounts not included in income by this section will not reduce the tax basis as a result of those amounts being excluded from gross income. 

•  Effective for tax years ending after date of enactment of the CARES Act. 

•  Provides similar treatment for Targeted EIDL advances and Grants for Shuttered Venue Operators, effective for tax years ending after the date of enactment of the provision.

•  All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month.

•  After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month. Borrowers, with any 7(a) or 504 loan in the hardest-hit sectors, as measured by the severity of sector-wide job losses since the start of the pandemic, include food service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services.

•  SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month.

•  SBA may establish a minimum loan maturity period for each loan product covered under this section to prevent program abuse.

•  Any business or applicant may only receive P&I payments for only one loan approved after CARES Act enactment.