COVID19

Second Draw PP Loans – Q & A

Who is eligible for a Second Draw PPP Loan?

An applicant is eligible for a Second Draw PPP Loan 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, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or destination marketing organization, or an eligible nonprofit news organization that: (i) previously received a First Draw PPP loan in accordance with the eligibility criteria in the Consolidated First Draw PPP IFR and  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 under subsection (B)(11) of the  Consolidated First Draw PPP IFR on or before the expected date on which the Second Draw PPP Loan will be disbursed.

Who is NOT eligible?

If your business has permanently closed, you are not eligible.

An entity that has gone out of business and has no intention of reopening is prohibited from receiving a PPP loan.  A borrower that has temporarily closed or temporarily suspended its business but intends to reopen remains eligible for a PPP loan.

If your businesses is in bankruptcy, you are not eligible. If the applicant or the owner of the applicant is the debtor in a bankruptcy proceeding, either at the time it submits the application or at any time before the loan is disbursed, the applicant is ineligible to receive a PPP loan. If the applicant or the owner of the applicant becomes the debtor in a bankruptcy proceeding after submitting a PPP application but before the loan is disbursed, it is the applicant’s obligation to notify the lender and request cancellation of the application. Failure by the applicant to do so will be regarded as a use of PPP funds for unauthorized purposes. The Borrower Application Form for PPP loans (SBA Form 2483), which reflects this restriction in the form of a borrower certification, is a loan program requirement. Lenders may rely on an applicant’s representation concerning the applicant’s or an owner of the applicant’s involvement in a bankruptcy proceeding.

Source: SBA, January 7, 2021

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