Second-Draw PPP Loans Now Available

The U.S. Small Business Administration, in conjunction with the U.S. Treasury Department, has reopened the Paycheck Protection Program (PPP). Initially reopened in phases in an effort to provide support to smaller underserved and minority-owned businesses, the program fully reopened on January 19.

This latest iteration of the program received $284 billion in funding for first and second PPP forgivable small business loans as part of the COVID relief legislation package passed by Congress on December 21. Loans are available to qualifying small businesses, including first-time borrowers and businesses that received a loan in previous rounds of the PPP.

"Second-draw" loans can provide valuable support to eligible private practice members in the form of a second fully forgivable PPP loan.

Key provisions

The PPP first reopened on January 11 and loans will be available through March 31, 2021. The loans are available on a first-come, first-served basis and will no longer be available after March 31.

The second round of the program creates expansions for what is included as potentially forgivable. Of particular interest for plastic surgeons is the stipulation that loan proceeds spent on protections, such as PPE and facility modifications, made in response to COVID-19 may be forgivable. The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible, which supersedes conflicting IRS guidance.

Eligibility

To be eligible for a PPP second-draw loan, an employer must have used or will use, the full amount of the initial PPP loan, have no more than 300 employees (500 if more than one location) and demonstrate at least a 25% reduction in gross receipts as compared to the same quarter in 2019 (with some caveats for new businesses).

As with the first round of the program, PPP borrowers are eligible to receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year. However, the maximum loan amount has been reduced from $10 million in the first round to a maximum of $2 million.

To apply

To submit a PPP loan application, visit the SBA website. Here you can also access other pandemic relief resources and use the Lender Match tool or view lenders near you on an online map.