PPP Second Draw Information & FAQs


Paycheck Protection Program Loans - Second Draw Program (PPP)

A COVID-19 disaster relief program designed to give existing PPP borrowers additional funds

Many businesses have continued to be negatively impacted by COVID-19. You need additional money to keep things afloat and pay your employees, but your first PPP loan has run dry.

At Watertown Savings Bank, both existing PPP borrowers and new clients alike can access a second PPP loan.  You’ll benefit from a lender that helped more than 600 businesses access the first round of PPP and knowledgeable staff members that will support you through your second application. You’ll also continue to receive information that will streamline the loan forgiveness process.

The Second Draw Paycheck Protection Program is an SBA loan program launched to help small businesses during ongoing COVID-19 related restrictions and closures. Like your first PPP loan, your second PPP loan can also be forgiven. Learn more about how a Second Draw PPP loan can benefit your business.

 

Apply Now for PPP (Second Draw)

 

 

Second Draw FAQs

With the Second Draw Paycheck Protection Program (PPP), small business borrowers can borrow additional funds for COVID-19 relief if they received a first PPP loan. Here are some helpful answers to the most common questions we receive on this program.
Will I be able to use my original PPP loan application to support my Second Draw PPP loan request?

In some cases, yes, your supporting documentation will carry over from your first loan application. However, you will be required to complete new SBA forms and sign new certifications. You are encouraged to gather documentation as if you were applying for the first time, as some documentation requirements are different.

 

If my first PPP loan was with another lender, can I apply with WSB?

Yes, our application is open to all qualified business owners. You are not required to use the same lender for your second PPP loan.

 

Where do I find my First Draw PPP Loan Number to include on my Second Draw loan application?
You will need your SBA Loan Number from your first PPP loan when applying for a Second Draw PPP loan. This is a ten-digit, all numerical number that was included on your closing documents for the first loan.
What are general eligibility requirements?
Here are the general eligibility requirements:
  • You received a first PPP loan 
  • You must have used the full amount of your first PPP loan for authorized uses by the expected date of disbursement of your second draw PPP loan. Please note that your loan does not need to be forgiven to qualify.
  • Your business must be able to demonstrate a revenue reduction of 25% or greater in 2020 relative to 2019. This is calculated by comparing your quarterly gross receipts for one quarter in 2020 with your gross receipts for the corresponding quarter of 2019. 
  • Your business cannot be permanently closed. If your business has temporarily closed or suspended, you are eligible.
  • Eligible business types include for-profit businesses, certain non-profits, independent contractors, sole proprietors, tribal businesses, and small agricultural coops.  
 
How can I use my Second Draw PPP loan?

Second Draw PPP loans can be used for the same expenses as your first PPP loan, with some additions. These expenses include:

  • Employee payroll, salary and wages
  • Utilities
  • Rent
  • Interest on loans and mortgages
  • Payment for any cloud computing, software and other accounting and HR needs.
  • Property damage costs that are not covered by insurance and that are due to public disturbances that occurred during 2020
  • Supplier payments pursuant to a purchase order, contract or order for goods that were in effect prior to receiving the PPP loan that are essential to your operations when the payments were made. Supplier costs for perishable goods can be made before or during the life of the loan.
  • Any costs that you incurred to help your business comply with Federal, State, or local requirements beginning on March 1, 2020.
  • Personal Protective Equipment (PPE) purchases


If I already received a PPP loan, does it need to be forgiven before I apply for a Second Draw PPP loan?

No. However, you must have used (or will use) the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP loan.

 
My business never received a PPP loan during the first program. Am I eligible for assistance?

Yes, you can still obtain a PPP loan for the first time. Details and requirements vary slightly from the Second Draw program; please visit our PPP information page for first draw borrowers.

 
If my business is temporarily closed due to government restrictions can I still apply for a Second Draw PPP Loan?

Yes – so long as your business is temporarily closed or suspended and plans on reopening. Businesses that are permanently closed are ineligible from receiving a Second Draw PPP loan.

 
Due to the pandemic, I was forced to file bankruptcy. Am I still eligible to receive a PPP loan?

No, if your business or any owner of the applying business is currently involved in bankruptcy, you are not eligible.

Will I qualify for a PPP loan?

PPP is designed to help small businesses struggling because of COVID-19 related restrictions and shutdowns. If you meet the following requirements, you’re a good candidate for a First Draw PPP loan:

  • You have not previously received a PPP loan. If you have received a PPP loan, visit our Second Draw PPP loans page 
  • You must have 500 or fewer employees
  • A wide variety of businesses are eligible for the program. Both for-profit and certain non-profit small businesses are eligible. In addition, sole proprietorships, independent contractors, tribal businesses, and small agricultural co-ops can obtain PPP loans
 
Will my Second Draw PPP loan be the same amount as my first PPP Loan?

It could be the same, but there are a few differences to the program requirements that may result in a different loan amount. Most importantly, accommodation and food services businesses (NAICS codes beginning with 72) are now eligible for 3.5x their average monthly payroll (this compares to First Draw PPP loans which were based on 2.5x average monthly payroll).

Further, the regulations allow for two ways of calculating your business’ average monthly payroll. You can choose what works best for you, and the calculation may be different than what was used for your First Draw PPP loan application.

The average monthly payroll calculation may be based on one of the following methods (please note that businesses that began operating in 2019 and/or seasonal businesses have separate distinct calculations):

  • Payroll costs during Calendar Year 2019
  • Payroll costs during Calendar Year 2020

Can I simply add to my First Draw PPP loan instead of applying for a Second Draw PPP Loan?

No, in the vast majority of cases you must apply again.

One exception is if  you believe your First Draw PPP loan was calculated incorrectly due to a change in SBA regulations (e.g. seasonal business definition, partnership self-employment income). In this case, you can request to have your First Draw PPP loan increased based on the change in rules.  

 

How do I calculate the 25% decline in revenue?

To calculate your decline in revenue, compare your quarterly gross receipts for any quarter in 2020 with your gross receipts for the corresponding quarter of 2019.

For example, a borrower with gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020 has experienced a revenue reduction of 40% between the quarters and is therefore eligible for a Second Draw PPP loan (assuming all other eligibility criteria are met).

Do NOT include the proceeds from your first PPP loan in your gross receipts/revenue figures.

If you were open in all four quarters of 2019, you can also compare your revenue to all of 2020 and submit copies of your annual tax forms that substantiate the revenue decline.


How do I need to spend my PPP loan to have it completely forgiven?

If you spend your PPP loan according to SBA’s guidelines, it will be forgiven. The general guidelines are as follows:

  • 60% of your loan must be spent on payroll costs
  • The remaining 40% may be spent on other costs that include:
    • Rent and utilities
    • Interest on mortgages and other loans
    • Payment for any software, cloud computing, and other human resources and accounting needs
    • Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance
    • Payments to a supplier pursuant to a contract, purchase order, or order for goods that were in effect prior to receiving the PPP loan that are essential to your operations when the payments were made. Supplier costs for perishable goods can be made before or during the life of the loan
    • Personal protective equipment and costs that you incurred to help your business comply with Federal, State, or local requirements beginning on March 1, 2020
What additional documentation will be needed to demonstrate a 25% decline in revenues?

You will be required to supply documents that prove that your business experienced a revenue reduction of 25% or greater in 2020 relative to 2019. These documents may include relevant tax forms, including annual tax forms or quarterly financial statements or bank statements. It is your responsibility to provide clear documentation and support of the 25% or greater decline in revenues.

 

How do I know if I qualify for a Second Draw PPP Loan based on the larger 3.5x average monthly payroll calculation?

SBA has designated that businesses with North American Industry Classification System (NAICS) code beginning with 72 (Accommodation and Food Services) qualify for a larger loan amount based on a calculation of 3.5x the average monthly payroll. 

The NAICS code included on your PPP application must match the code provided on your most recent IRS income tax filings in order to meet SBA requirements. Please review your business tax returns or consult with your accounting professional before applying if you believe your business is eligible for the larger 3.5x calculation. Only businesses which report a NAICS code beginning with 72 as its business activity code on its most recent IRS income tax return are eligible to use the 3.5x calculation.