Paycheck Protection Program (PPP) reopens January 11, 2021

The information below is intended as a “guide” to businesses interested in applying for a loan under the extended Paycheck Protection Program (PPP) as provided for in the Economic Aid Act. It is just a guide. There are specific provisions that are too long to include in this summary. More detailed information is available at Links to more detailed documents are contained at the end of this summary.

The SBA has announced its final rules for businesses regarding eligibility and use of PPP fund.. Many of the rules are similar to those used in the first round of PPP loans that were authorized by the CARES Act in 2020. There are new rules relating to “First Draw” and “Second Draw” PPP loans. “First Draw” loans are for businesses who did not receive a PPP loan from the CARES Act in 2020. “Second Draw” loans are for businesses who did receive a loan under the CARES Act in 2020 and are not eligible for a second loan under the Economic Aid Act.


Who is eligible? (abbreviated summary list)
1. A “small business” with less than 500 employees,

1. an independent contractor, eligible self-employed individual, or sole proprietor,

1. a business concern, a tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code (IRC), a tax-exempt veterans organization described in section 501(c)(19) of the IRC, and

1. you were in business on February 15, 2020.

How much can I borrow?

Not more than $10 million.

2.5 times your average monthly payroll, excluding amounts paid to individuals in excess of $100,000 per year.

Plus any outstanding balance of an EIDL loan made between 1/1/2020 and 4/3/2020.

What qualifies as “Payroll Costs”?

1. Compensation to employees in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent;

1. payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal;

1. payment for the provision of employee benefits consisting of group health care or group life, disability, vision, or dental insurance, including insurance premiums, and retirement;

1. payment of state and local taxes assessed on compensation of employees.

What are the “terms” of the loan?

· 1% interest
· 5 years

When will I have to begin paying principal and interest on the loan?

You can use anywhere between 8 and 24 weeks after receipt of the loan to calculate the “loan forgiveness period”

You have 10 months to submit your loan forgiveness application to the lender

You will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender.

How can PPP loans be used?

· Payroll cost
· Cost related to continuation of group health care and related programs
· Mortgage interest payments, rent, utilities,
· Interest payments on other debts incurred prior to 2/15/2020,
· Refinancing EIDL loans made between 1/31/2020 and 4/3/2020.
· Covered operating expenses
· Other expenses as defined by the Act.

Can PPP loans be forgiven in whole or in part?

Yes – The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. An eligible borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgivable purposes and employee and compensation levels are maintained or, if not, an applicable safe harbor or exemption applies.


The information below addresses the rules relating to eligibility and processing of “Second Draw Loans”. For the sake of brevity, it will only address key differences from the same provisions of “First Draw Loans”.

Like the “First Draw Loans,” these loans are guaranteed 100% by the SBA. There is no collateral requirement and no personal guaranteed required. The terms of the loan are 1% interest with a maturity of 5 years.

The eligibility requirements for “Second Draw Loans” are narrower. They are limited to employers with no more than 300 employees who experienced a revenue reduction of at least 25% in 2020 relative to 2019.

The loan amount calculation period is different. The maximum amount is 2.5 times the average monthly payroll, not to exceed $2 Million. The Act provides that the relevant time period for calculating a borrower’s payroll costs for a Second Draw PPP Loan is either the twelve-month period prior to when the loan is made or calendar year 2019. There are also “tailored” methodologies for certain categories of borrowers.

Who is eligible for a “Second Draw Loan”?

1. if it is a business concern, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization eligible for a First Draw PPP Loan, veterans organization,

1. previously received a First Draw PPP loan in accordance with the eligibility criteria

1. has used, or will use, the full amount of its First Draw PPP Loan (including the amount of any increase on such First Draw PPP Loan) on authorized uses on or before the expected date on which the Second Draw PPP Loan will be disbursed,

1. employs not more than 300 employees,

1. experienced a reduction in gross revenue greater than 25% over the previous year.

Where can I get more detailed information?

Rules for “First Draw” Loans

Rules for “Second Draw Loans”

Paycheck Protection Program Loan Application

Second Draw Borrower Application Form


If you need further assistance with the newly opened PPP loan process, please contact SCORE Mid-Florida by going to and requesting a mentor.



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