Five-year maturity
All guidance issued in connection with First Draw Loans applies to Second Draw Loans, except as specified in the new guidance applicable to Second Draw Loans.
SBA Guaranty
As with First Draw Loans, Second Draw Loans are subject to an SBA guaranty of 100% of Second Draw Loans. As a result, a lender who makes Second Draw Loan will not bear the financial risk of non-payment, as long as the lender complies with its obligations under the program.
Eligibility
Eligibility for Second Draw Loans is much more limited than for First Draw Loans. To be eligible an applicant must be a business concern, nonprofit organization, housing cooperative, veterans organization, tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that (i) employs not more than 300 employees, (ii) experienced a 25% or greater reduction in gross receipts for at least one quarter in 2020 as compared to the same quarter in
For the last seven months, the U.S. Small Business Association (“SBA”) and U.S. Treasury Department have administered one of the Federal government’s widely supported COVID-19 response.
CAA”), which provides $900 billion in new COVID-19 relief funding, was signed into law on December 27, 2020. Section 324 of Title III of the CAA, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (the “
Economic Aid Act”), introduces a new $15 billion grant program through which the U.S. Small Business Administration (the “
SBA”) will provide aid to struggling live venue operators and certain related businesses. This program offers a critical lifeline from the Federal government for the nation’s performing arts venues, movie theatres and museums. Grants made under such program are referred to by the SBA and in this publication as “
Milwaukee
, Wis. –
Business owners who received a loan under the Paycheck Protection Program may qualify for the Second Draw PPP Loan. At least $25 billion is being set aside for eligible borrowers with a maximum of 10 employees, or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods. The same general loan terms are applicable as the First Draw PPP Loans with a few changes.
What is the Second Draw Paycheck Protection Program?
The Second Draw Paycheck Protection Program can be used to help fund payroll costs, including benefits. Funds can also be used to pay for 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.