Paycheck Protection Program
Thank you for choosing Equity Bank for your Paycheck Protection Second Draw Loan.
The brand new “Second Draw” program is for small businesses, non-profits, sole proprietors, and independent contractors who have exhausted their initial PPP loan. The program will make new loans through March 31, 2021 or until the new funding is exhausted.
You are eligible for a second draw loan if you have exhausted your first PPP loan and,
(1) you have less than 300 employees, and,
(2) you have experienced a greater than 25% reduction in gross receipts during the first, second, third, or fourth quarter in 2020 relative to the same quarter in 2019.
(3) have used 100% of the initial PPP loan
Revised Lender Fee Structure
- Loans up to $50,000 – lesser of $2,500 or 50% of principal amount
- Loans from $50,000 to $349,999 – 5% of principal amount
- Loans $350,000 or higher – 3% of principal amount
Note: Entities with significant ties to China are ineligible for a second draw loan.
- The maximum loan amount is the average monthly payroll costs for the entity during the 12 months prior to the loan or, at the election of the borrower, 2019 multiplied by 2.5 (or 3.5 for employers in the accommodation and food service industry).
- Seasonal employers utilize average monthly payroll costs for a 12-week period between February 15, 2019 and February 15, 2020. A loan may not exceed $2 million.
Second Draw Loan Forgiveness
The amount of loan that can be forgiven is the lesser of:
- Costs incurred or expenditures made between the date of the origination of the loan and ending on a date of your choosing that is between 8 and 24 weeks after origination for: (a) payroll costs, (b) qualifying mortgage interest or rent obligations, (c) covered utility costs, (d) covered operations costs, (e) covered property damage, (f) covered supplier costs, and (g) covered worker protection expenditures; or
- Payroll costs for the same period divided by 0.60 (this serves as a cap on the total loan forgiveness to ensure that at least 60% of the total amount forgiven is for payroll costs).
- Like original PPP loans, the amount of loan forgiveness can be reduced if the borrower has (1) reduced the number of employees or (2) employee salaries by more than 25%. However, the same safe harbors that apply to original PPP loans apply to Second Draw loans. Learn more about these Safe Harbors in our Guide for PPP Loan Forgiveness.
- Set-Asides: $25 billion is set aside for employers with 10 or fewer employees or for loans less than $250,000 for entities located in a low-income neighborhood. (top)Special rules for news organizations, and registered 501(c)(6) organizations including tourist boards, authorities, conventions and visitors bureaus who do not receive more than 15% of receipts from lobbying activities.
- Specific loan calculation for the first round of PPP loans for farmers and ranchers that (1) operate as a sole proprietor, independent contractor, self-employed individual; (2) report income and expenses on a Schedule F; and (3) were in business as of February 15, 2020. These entities may utilize their gross income in 2019 as reported on a Schedule F. Lenders may recalculate loans that have been previously approved to these entities if they would result in a larger PPP loan.
- Publicly traded companies are not eligible for PPP loans
Second Draw Loan Terms
- Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.
- New entities may receive loans of up to 2.5X the sum of their average monthly payroll costs.
- Entities in Accommodations and Food Services may receive loans of up to 3.5X average monthly payroll costs.
- Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.
- Waiver of affiliation rules that applied during initial PPP loans apply to a second loan.
- Loan forgiveness. Borrowers of a PPP second draw loan are eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. Full forgiveness will still require the same 60/40 allocation between payroll and non- payroll costs that applies to initial PPP loans.
- For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits its loan forgiveness application and non-profit and veterans’ organizations may utilize gross receipts to calculate their revenue loss standard.