SBA Paycheck Protection Program (Second Draw)

On December 27th, 2020, the most recent Covid-19 federal relief bill was signed into law. As part of this relief, the Small Business Administration has implemented a second Paycheck Protection Program loan draw for PPP borrowers needing additional relief. Like the first version PPP loan, this loan can be forgiven if certain requirements are met. No personal guarantee or collateral is required. There are no fees or prepayment penalties for this loan.

Chain Bridge Bank, N.A. is approved by the SBA to offer Paycheck Protection Program loans. All applications must be submitted through the Bank's online portal.

When considering applying for the PPP Second Draw loan, all potential borrowers should determine whether this loan is appropriate for their business or organization. Most importantly, the borrower must be prepared to certify that current economic uncertainty makes this loan request necessary to support ongoing operations. Here are other important guidelines to know:
Eligibility requirements
  • Must have received PPP First Draw loan and spent all proceeds before disbursement of Second Draw
  • 300 employees or less
  • Reduction in gross receipts of 25% or more in any quarter of 2020 when compared to the same quarter in 2019
Who's ineligible:
  • Firms not operational as of February 15th, 2020
  • Businesses and nonprofits primarily engaged in political or lobbying activities
  • Passive investment concerns
  • Household employers
  • Offshore companies.
Loan limits:
  • For borrowers outside of the food service and hospitality industries, the loan size is 2.5 times the average monthly payroll costs (including fringe benefits) up to a maximum of $2 million, excluding employee salary over $100,000
  • For food service and hospitality (NAICS 72) entities, the loan size 3.5 times the average monthly payroll costs (including fringe benefits) up to a maximum of $2 million, excluding employee salary over $100,000.
Eligible Expenses

  • Payroll
  • Rent
  • Mortgage interest
  • Utilities
  • Personal protective equipment and related expenses to comply with COVID-19 federal health and safety guidelines
  • Software and cloud computing services and accounting needs
  • Property damage costs due to 2020 public disturbances not otherwise covered by insurance or other compensation
  • Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
Loan Forgiveness

  • Borrowers with loans above $150,000 will be required to complete an SBA comprehensive application for loan forgiveness through Chain Bridge Bank, N.A.’s electronic portal.
  • Borrowers with loans of $150,000 or less will be required to complete an SBA 1-page application for loan forgiveness through Chain Bridge Bank, N.A.’s electronic portal. 
What's needed to apply

There are three types of documents that can be used to show the required 25% or greater decline in gross receipts for the Second Draw loan, and the special instructions for ensuring the eligibility of each type of document. Chain Bridge Bank, N.A. recommends that applicants consults their attorneys and accountants for advice on compliance with the program.

Financial Statements

  • Either audited, or if not audited, the applicant must sign and date the first page of the financial statement, initial all other pages, attesting to their accuracy, and use a consistent accounting method (in accordance with the entity’s accounting method, i.e., accrual or cash).  
  • If the financial statements do not specifically identify the line item(s) that constitute gross receipts, the applicant must annotate which line item(s) constitute gross receipts on the financial statements.

Bank Statements

  • These must show deposits from the relevant quarters used for measuring the decline in gross receipts and the applicant must annotate, if it is not clear, which deposits listed on the bank statement constitute gross receipts (e.g., payments for purchases of goods and services) and which do not (e.g., capital infusions, insurance payments, refunds, First Draw PPP loans).

Tax Returns

  • IRS annual income tax returns are used if the applicant has chosen the annual rather than quarterly reference period for the decline in gross receipts. If the employer has not yet filed a tax return for 2020, the applicant must fill out the return forms, compute the relevant gross receipts, and sign and date the return, attesting that the values that enter into the gross receipts computation are the same values that will be filed on the employer's tax return.

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