How to Apply for a 2nd PPP Loan

You may be eligible to apply for a second Paycheck Protection Program (PPP) loan if your business has been impacted by COVID-19.

If you’re not sure how to apply for a second PPP loan, this blog post will walk you through the process step-by-step.

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Overview

If you’re a small business owner who received a Paycheck Protection Program (PPP) loan in 2020, you may be eligible to apply for a second loan in 2021. The PPP2 Act, which was signed into law on December 27, 2020, created a new round of funding for PPP loans, as well as some changes to the program. If you’re thinking about applying for a second PPP loan , here’s what you need to know.

What is the PPP Loan?

The PPP Loan is a loan that is given to small businesses and is intended to help them keep their workers employed during the COVID-19 pandemic. The loan is forgiven if the business keeps its workers employed for a certain period of time.

What are the eligibility requirements?

To be eligible for a Second Draw PPP Loan, the following criteria must be met:
-You must validate that you have used, or will use, the full amount of your First Draw PPP loan on or before the expected PPP loan forgiveness application deadline.
-You must have no more than 300 employees.
-You must have used or will use the proceeds from your First Draw PPP loan primarily for payroll costs, and you must demonstrate a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Applying for a 2nd PPP Loan

How to apply

You can apply for a 2nd PPP Loan if you:
-Already received a 1st PPP Loan and used the full amount only for authorized uses
-Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020

If you’re eligible, you can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating.

To apply for a 2nd PPP Loan, you will complete and submit the SBA Form 3508S (PPP Second draw Borrower Application Form). This form is similar to the form used for 1st PPP Loans, with a few updates to reflect changes in program eligibility and requirements. As with the 1st PPP Loans, borrowers are responsible for certifications on the use of loan proceeds.

What documentation is required?

In order to apply for a 2nd PPP loan, borrowers will need to provide the following documentation:

-Payroll reports from the last 12 months
-Revenue reports from the last 12 months
-Proof of eligibility for the first PPP loan
-Any relevant contracts or leases
-A detailed explanation of how the funds from the first PPP loan were used

Forgiveness

The Paycheck Protection Program (PPP) loan forgiveness application is now available on the SBA’s website. Borrowers can apply for forgiveness of their PPP loan through the SBA’s online application portal. The application must be submitted no later than 10 months after the end of the covered loan forgiveness period.

What expenses are eligible for forgiveness?

To be eligible for forgiveness, the funds must be used for:
-Payroll costs
-Rent
-Mortgage interest
-Utilities

You can find more information on the SBA’s website.

How to apply for forgiveness

The loan forgiveness process is as follows:

1. Make a request to your lender for loan forgiveness. Include the following information in your request:
-The amount you are requesting to be forgiven
-How you spent the loan proceeds
-How many full-time equivalent (FTE) employees you had during the covered period or alternately during the specified period chosen for your Paycheck Protection Program loan
-Any other relevant information that will support your request for forgiveness.
2. Your lender has 90 days to review and approve your request for forgiveness.
3. Once your lender approves your request, they will send a forgiveness payment to the SBA. The SBA has up to 90 days to review the lenders decision and make a final determination on your loan forgiveness amount.