2021 Update on What the Payroll Protection Program’s Second Draw Means for Executives

by | 3 Feb, 2021

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When the first Payroll Protection Program went into effect through the CARES Act in March of 2020, small business owners around the country were provided with financial support to help them survive the turbulent waves created by the COVID-19 pandemic. The assistance was needed, enabling small businesses and 501(c)3 organizations to obtain a loan to provide a bit of relief during the early days of lockdowns and closures.

Fast forward many months into the pandemic and continued closures, and the Consolidated Appropriations Act, 2021 was approved by congress. After being signed into legislation by President Trump on December 27, 2020, the Act authorized the second draw of PPP loans and expanded PPP eligibility.

Second draw applications opened on January 13, 2021, for small businesses hoping to get assistance from the $25 billion being allocated for PPP loans.

Second Draw PPP Loan Details

The Second Draw PPP loan that is available through the Consolidated Appropriations Act, 2021 enables eligible small businesses to receive a second draw that essentially follows the same terms as their first loan.

  • Who qualifies for a Second Draw PPP Loan?

Those who are eligible for the second PPP Loan must meet certain criteria.

  1. They received the first round of the PPP loan.
  2. First round funds must have been or will be, used completely in authorized ways.
  3. Must have no more than 300 employees.
  4. Must be able to prove that they have had at least a 25% reduction over comparable 2019 and 2020 quarters.
  • What can the loan be used for?

The funds from the Second Draw PPP Loan can be used in a number of ways that are beneficial to the business and its employees.

  1. Funding payroll and benefits.
  2. Rent
  3. Mortgage insurance.
  4. Utilities.
  5. Uninsured property damage costs from 2020 vandalism.
  6. COVID-19 worker protection costs.
  7. Operation expenses.
  8. Vendor costs.
  • How much can a small business receive from the Second Draw PPP Loan?

Most eligible businesses will be able to receive 2.5 times their average monthly payroll costs from 2019 and 2020, up to $2-million. However, businesses that are in the Accommodation and Food Services industry (see: Navigate PEO’s industries served) can receive up to 3.5 times their monthly average.

  • How does a small business apply for a Second Draw PPP Loan?

On January 13, 2021, applications for the Second Draw PPP Loan began to be accepted. Businesses that want to apply can do so until March 31, 2021, when applications close. The Small Business Association is accepting applications for the Second Draw PPP from participating lenders. A list of participating lenders can be found here.

It’s important to note that all Second Draw PPP Loans will have the same terms. The lender that is used will not affect the terms of the loan.

  • Is anyone eligible for the Second Draw PPP Loan that was not eligible for the first?

Due to criteria, the first round of PPP loans excluded organizations that are eligible for the Second Draw PPP Loan.

501(c)(6) organizations are now eligible provided they don’t receive more than 15% of their receipts from lobbying, activities are no more than 15% lobbying, and lobbying activity costs prior to February 15, 2020 did not exceed $1-million.

Destination Marketing organizations are now eligible provided they don’t receive more than 15% of their receipts from lobbying, activities are no more than 15% lobbying, and they are registered as a 501(c) organization, a political subdivision of a state or local government, or a quasi-government entity.

Get Your Second Draw PPP Loan

If you have a small business that is in need of assistance due to the COVID-19 pandemic, don’t hesitate to apply for the Second Draw PPP Loan. This loan gives small businesses the support and assistance they need to get through this difficult time.

Get the help that you need to keep your business up and running. The Second Draw PPP Loan is a reminder that you’re not alone.

Check out the PPP application here on SBA.gov and get ready to talk to a lender.


  1. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans
  2. https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program
  3. https://www.bostonfed.org/in-the-region/covid-19-resources/paycheck-protection-program.aspx
  4. https://www.score.org/resource/new-paycheck-protection-program-ppp-loans-how-qualify-and-apply
  5. https://www.natlawreview.com/article/paycheck-protection-program-expected-impact-second-draw-loans
  6. https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Tom DiSilva
Thomas DiSilva has been providing professional human resource services for over 30 years and serves as the CEO of Navigate PEO in the Greater New England area where he actively partners with organizations to help them grow and gives back to the community. He is skilled in HR Management, and some key skills and HR services he makes available to organizations of all sizes, such as Negotiation, Operations Management, Coaching, and Employee Benefits Design. He is an active member of several professional organizations including the Society for Human Resource Management (SHRM), the National Association of Professional Employer Organizations (NAPEO), and the American Payroll Association (APA). He deeply enjoys helping through both personal philanthropy and Navigate Cares, which serves several nonprofit organizations like USO and The Boys & Girls Club. Connect with Tom and schedule a time for your organization's free HR consultation!

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Disclaimer: this article does not represent expert advice and is provided for informational purposes. Please get in touch if you would like expert HR advice.