Yes, You Can Get a Second Draw from PPP

UPDATE: The PPP loan application period ended May 31, 2021. Learn about financing options available for small businesses today at Lendio.com

If you’ve been wishing the SBA would update the Paycheck Protection Program (PPP) to allow borrowers to apply for a second loan, we have some good news for you. You can now apply for a Second Draw on your PPP loan.

What Is a PPP Second Draw?

A Second Draw allows you to receive a second, potentially forgivable disbursal of funds.

How Big Is the PPP Second Draw?

Qualifying businesses can receive a Second Draw worth up to 2.5 times their monthly payroll expenses, the same way the loan worked for the First Draw. 

Businesses with a NAICS code starting in “72” can qualify for up to 3.5 times their monthly payroll expenses. This provision was added to the PPP reboot in recognition that food service and accommodation businesses have been especially hard hit by the COVID-19 pandemic. 

Qualifications for the Second Draw

Eligible entities may qualify for a second PPP draw if they meet the following criteria:

• The entity received a First Draw PPP loan during a previous round. 
• The entity employs 300 or fewer employees. 
• The entity has used (or will use) the full amount of their First Draw.
• The entity has only (or will only) use funds from the First Draw on allowed uses. 
• The entity experienced a 25%+ reduction in revenue in 2020 compared to 2019.

What You’ll Need to Apply

You’ll need the following to apply for a PPP Second Draw: 

SBA Loan Number

You will be required to enter your SBA Loan number to apply for a Second Draw. This number was issued to you by the SBA when they approved your application for First Draw funds. If you are applying through the same lender, they should have your SBA Loan number on file. If not, you’ll have to retrieve it from your records. 

(If you applied through Lendio during the first round, your SBA Loan number will auto-populate within the application. That’s one more thing you don’t have to worry about.)

Payroll Documentation

The documentation required to validate payroll costs will remain largely the same as it was for the First Draw. If you apply through the same lender that you used for your First Draw and you used 2019 figures in your payroll calculations, no additional payroll documentation will be required. 

If you are applying through a new lender or if you did not use documents from 2019 to validate payroll, then you may be required to submit additional documentation. Learn more about the types of documentation the SBA will accept for payroll validation

Revenue Reduction Certification or Documentation

For loans less than $150,000, borrowers may not be required to provide documentation proving a 25%+ revenue reduction due to the COVID-19 pandemic. The borrower will instead be asked to certify that they experienced a 25%+ revenue reduction as a result of the pandemic. 

For loans greater than $150,000, borrowers will be required to provide documentation demonstrating a revenue reduction of 25% or greater. 

Lendio Makes It a Breeze to Get Funded for Your Second Draw

We’ve been in the business of making it easy to access business capital for going on 10 years. Here are some ways that we’ll make your Second Draw application as quick and easy as possible. 

For Borrowers Who Applied Through Lendio on Their First Draw

If you applied through Lendio for your First Draw, we will auto-populate as much information as possible when you apply for your Second Draw. This includes your SBA Loan number and may include additional information about your business.

For Borrowers Who Are New to Lendio with Second Draw Applications

We’ve used our high-tech tools to give you a seamless, speedy application process. We make the application process simple and easy. We’ve partnered with multiple lenders to give you the best chance of funding. While the requirements for a Second Draw are broad, it never hurts to have a backup plan. 

How Applications Will Be Handled if You Have an Unresolved First Draw

The SBA reserves the right to review any PPP loan. If your First Draw is under review by the SBA, you will have to wait until the review is complete to apply for a PPP Second Draw. If you apply for a Second Draw before the review of the First Draw is complete, the application will be rejected. 

Are Any Businesses Prohibited from Applying for a PPP Second Draw?

Yes. To ensure that PPP Second Draw funds reach the small businesses that need them the most, the following entity types are prohibited from receiving a Second Draw:

• Financial businesses primarily engaged in the business of lending (such as banks, finance companies)
• Life insurance companies, but not independent agents
• Businesses located in a foreign country
• Pyramid schemes
• Gambling
• Private clubs
• Government-owned entities (but not those owned or controlled by a Native American tribe)
• SBA Loan packagers
• Any business providing prurient sexual material (i.e., strip clubs)
• Political or lobbying companies 
• Shuttered Operator Grant recipients
• Those engaged in illegal activity
• Household employers (an individual who employs a housekeeper or nanny) 
• 20% or more owner that has criminal issues, or prior default on government debt
• Organizations currently in bankruptcy or who file for bankruptcy after submitting their PPP application
• Businesses not in operation prior to February 15, 2020
• Permanently closed businesses
• Securities issuers
• Businesses where a senior government official has a controlling interest 
• Hedge funds and private equity funds
• Businesses primarily involved in lobbying activities
• Businesses where a senior government official owns a 20%+ share of the organization
• Publicly traded companies
• Certain entities organized under the laws of the People’s Republic of China or Hong Kong or with ties to China or Hong Kong
• Any individual required to register as a Foreign Agent under the Foreign Agents Registration Act
• Borrowers who already received a PPP Second Draw

Apply for Your Second Draw 

We anticipate that these funds will go quickly. Don’t delay. Apply now. 

Want help? Let us walk you through the application with this step-by-step guide.

“Lendio strives to provide you with the most current information as it relates to the Paycheck Protection Program, related SBA programs, and relevant regulations. The rules and regulations governing these programs are being regularly clarified by the SBA, and other agencies. In some cases, the provided guidance may directly conflict with other competing guidance, laws, rules, or regulations. Due to these changes, Lendio cannot guarantee that the information contained in this page reflects new changes or updates.

Lendio advises you to review the SBA guidelines and regulations on your own and determine your Company’s best approach to receiving SBA loans. Lendio urges you to consult your own attorneys, lawyers, and consultants to make the best decision possible. The information contained herein should not be construed as legal or tax advice, and should not be relied upon as such.”