PPP-2 “Second Draw” Forgivable Loans



Tips for keeping for qualifying


If you received an initial Payroll Protection Program loan, you can qualify for a second round (called a “second draw”) of PPP tax-free money. 

 To qualify for the second-draw PPP money, you must

  1. have 300 or fewer employees;
  2. have suffered a 25 percent or greater loss in revenue during at least one quarter of 2020 when compared to 2019; and
  3. have already used your original PPP money (or be planning to use it soon).

The mechanics of the second-draw PPP loan amount follow the rules that apply to the original (first-draw) PPP loan, with some modifications. The overall limits work as follows:

  • The loans are capped at $2 million or less.
  • If you are not a hotel or restaurant (NAICS code 72), you identify your average monthly payroll for either 2019 or the trailing 12 months, and then multiply it by 2.5 to find your loan amount.
  • If you are a hotel or restaurant, you multiply by 3.5.


During a period of your choice, beginning eight weeks from the origination date of the loan and ending 24 weeks after the origination date, you must use 60 percent or more of the monies for defined payroll in order to achieve 100 percent forgiveness. 

Expenses that can qualify for forgiveness include:

  • Payroll
  • Rent
  • Interest on mortgage obligations
  • Utilities
  • Operations expenditures
  • Property damage
  • Supplier costs
  • Worker protection


And finally, keep these three thoughts in mind: 

  1. Act fast, because this money goes in a hurry.
  2. The incoming PPP loan monies are tax-free.
  3. Expenses paid with PPP loan monies that are forgiven are tax-deductible.


    VR Blackmon

    FNG LLC Tax Advisors


    If you wish to discuss this in more detail please send an email to taxes@adjusterzone.com and I will respond as soon as possible, usually within 24 hours. We do offer free initial consultations and if our services are used, then a 20% discount is available through the AdjusterZone Gold Membership. Sign Up Today!

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