Starting two days ago, community financial institutions (Community Financial Development Institutions, Minority Depository Institutions, Community Development Corporations or Microlenders) can submit First Draw PPP loan applications to the SBA and on Wednesday, they will be able to submit Second Draw PPP loan applications. Just a few days following, the PPP will re-open to all participating PPP lenders for First and Second Draw PPP loans.
Updated PPP Loan Applications and Process Details
Updated applications have been released for First Draw and Second Draw PPP loans. PPP applications must go through participating PPP lenders, who then route them to the SBA for approval. Per this guidance, the SBA continues to call upon our lending partners to assist eligible borrowers in underserved and disadvantaged communities and address potential barriers to access to capital.
Application: First Draw PPP Loan
Application: Second Draw PPP Loan
If you are seeking economic aid via the PPP, we encourage you to start communication with your lender now to understand the financial institution’s processes.
What’s a First Draw PPP Loan and a Second Draw PPP Loan?
In general, a First Draw PPP loan is for eligible borrowers who did not receive a PPP loan before the program closed in August 2020. A Second Draw PPP loan is for certain eligible borrowers that previously received a PPP loan, generally have 300 employees or less, and have suffered a 25% reduction in gross receipts.
Overview: Second Draw PPP Loan
Section 311 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the EAA) allows certain small businesses that have already received a Paycheck Protection Program (PPP) loan to apply for a second draw. On Friday, January 6, 2021, the SBA released Form 2483-SD (Second Draw Borrower Application) and Form 2484-SD (Second Draw Lender Guaranty Application) to be used for Second Draw PPP loans. Community financial institutions may begin using the new form to submit Second Draw PPP loans on Wednesday, January 13, 2021, other participating lenders will be able to make Second Draw loans shortly thereafter.
A borrower is eligible for a Second Draw PPP Loan only if they have 300 or fewer employees (including affiliates) and experienced a revenue reduction of at least 25% in any 2020 quarter relative to a corresponding quarter in 2019. In addition, a Second Draw PPP Loan may only be made to an eligible borrower that has received a First Draw PPP loan and has used (or will use) the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw loan will be disbursed. To reflect these statutory requirements, SBA Form 2483-SD asks the borrower to submit some additional information.
Unlike the form used for First Draw PPP loans (Form 2483), Form 2483-SD includes a size standard box that asks for the applicant’s total number of employees. This differs from the First Draw PPP application, in which the borrower must only check a box stating that they have no more than 500 employees, they meet SBA’s industry size standards, or they meet SBA alternative size standard.
Form 2483-SD also includes a section in which the borrower must list which quarters demonstrate a 25% reduction in revenues and gross receipts for those corresponding quarters. However, the form notes that applicants for loans of $150,000 or less may leave this section blank and instead provide proof when they apply for loan forgiveness. Nevertheless, the borrower must be able to produce proof of the reduction upon SBA’s request.
Finally, the Second Draw form requires the borrower to certify that they will use their First Draw loan prior to disbursement of their Second Draw and that their business has realized a reduction in gross receipts in excess of 25%.
Stay up to date via Twitter & SBA.gov
We will continue to share details about additional economic aid being administered by the SBA for small businesses and other eligible organizations as soon as they are determined. Stay up to date by following us on Twitter (@SBA_Michigan) and visiting us online at sba.gov. More specifically, the best source of accurate information on the PPP is http://www.sba.gov/
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About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of business ownership. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
