Saturday, February 27, 2021
The Consolidated Appropriations Act (CAA), 2021 includes a provision that modified and extended the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). Specifically, Section 311 of the Additional Coronavirus Response and Relief provisions of the CAA provides for PPP second draw loans for eligible businesses. Employers seeking a PPP loan may apply through March 31, 2021. Below are answers to some key questions regarding second draw PPP loans.
Question 1. What are some key distinctions between first and second draw PPP loans?
Answer 1. Second draw PPP loans are intentionally narrower and smaller in terms of eligibility and amount. In order to be eligible, businesses must be able to demonstrate that they experienced a 25 percent reduction in gross receipts in a 2020 calendar quarter compared to the same quarter in 2019. While first draw PPP loans were capped at $10 million per borrower based on payroll costs in 2019, second draw PPP loans have a maximum of $2 million per borrower based on payroll costs in either 2019 or 2020. Additionally, first draw PPP loans were subject to a $20 million maximum for businesses that were part of a single corporate group, but second draw loans are subject to a $4 million maximum.