PPP Second Draw – Eligibility

  • Borrowers must have previously received a PPP loan (First Draw PPP loan)
  • The funds from the first draw have to be fully used for authorized purposes on or before the expected date of disbursement of the Second Draw
  • Loans are available through March 31, 2021
  • The borrower must have 300 employees or fewer
  • The borrower must have a 25% or more reduction in revenue in 2020 compared to 2019


PPP Second Draw – Revenue Reduction Calculation

  • Compare quarterly gross receipts for one quarter in 2020 with gross receipts of a corresponding quarter in 2019
  • Example:
    • 2019 Q1 Revenue – $10,000
    • 2020 Q1 Revenue- $5,000
    • 50% reduction qualifies for PPP Second Draw

PPP Second Draw – Revenue Reduction Calculation Continued…

  • For borrowers that were in business for all of 2019, you can use an annual calculation
  • 2020 annual receipts must show a 25% or greater reduction compared to 2019 annual receipts
  • The borrower will need to provide annual tax returns to show this
  • This is good for borrowers who do not have revenue information by quarter readily available

PPP Second Draw – Calculations

  • The second draw uses the same basis of 2.5 times average monthly payroll costs or Schedule C income, similar to the First Draw calculations
  • The limit is $2 million
  • Can use 2019 payroll OR 12 months before the loan being made

PPP Second Draw – Calculation Special Case

  • EXCEPTION- North American Industry Classification System Code 72 entities (food vendors, restaurants, hotels, etc.) can use a 3.5 multiplier
    • https://www.naics.com/six-digit-naics/?code=72

PPP Second Draw – Application

  • Loans over $150k- 
    • Submit documentation of revenue reduction of 25% or more
  • Loans under $150k- 
    • Revenue reduction documentation is NOT required at the time of the application
    • Revenue reduction documentation must be submitted on or before the date of application for loan forgiveness

Loan Terms

  • No collateral required
  • No personal guarantees
  • 1% interest rate calculated on a non-compounding, non-adjustable basis.
  • Five-year maturity
  • Lenders are permitted to rely on certifications of the borrower to determine the borrower’s eligibility and use of loan proceeds


  • Any entity that was ineligible to get the First Draw
  • Any business primarily engaged in political or lobbying activities
  • Entities organized in China
  • Publicly traded companies

Questions?  Contact Bette!

Send an email- bette@bettehochberger.com

Schedule a Zoom call- calendly.com/bettehochberger/15-minute-meeting

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