The CAA: Second Draw PPP Loans

The Consolidated Appropriations Act of 2021 (CAA) allocates about $285 billion in additional Paycheck Protection Program (PPP) loan funds. It also makes changes to the existing program regarding eligibility, loan use, and more.

Please Note: While the SBA is now accepting applications for Second Draw PPP loans, you can still apply for a First Round loan if you have not taken advantage of one yet. 

What’s New

Under the CAA, Second Draw PPP loans are different from First Round PPP loans in a few key ways. To be eligible for a Second Draw PPP loan, businesses must employ fewer than 300 employees (down from 500). More types of businesses are now eligible to apply. The loans may also be used for more types of expenses. 

Please see below for more details.


To be eligible for a PPP Second Draw Loan, you must:

  1. Have been in operation on or before February 15, 2020,
  2. Employ fewer than 300 employees, AND
  3. Have had at least a 25% reduction in gross receipts during any quarter of 2020 (when compared to the same quarter in 2019). 

Please note: If your business was not operating in the first or second quarter of 2019, you must compare third quarters. If your business was not operating in the third quarter of 2019, you must compare fourth quarters. If your business was not operating in the fourth quarter of 2019, you may compare your first quarter of 2020 with your second, third, or fourth quarter of 2020 (only if you submit an application on or after January 1, 2021).

There may be exceptions for franchises, as well as businesses in the accommodation and food service industries with multiple locations.

The following entities are also eligible for PPP Second Draw Loans so long as they satisfy the above criteria:

  • Nonprofit organizations
  • Housing cooperatives 
  • Veterans’ organizations
  • Tribal business entities
  • Eligible self-employed individuals, sole proprietors, or independent contractors
  • Small agricultural cooperatives

If you meet all of the requirements, you are eligible for one PPP Second Draw Loan.


Under the CAA, more types of expenses are eligible for forgiveness. You can still use First Round and Second Draw PPP loan funds for expenses covered under the CARES Act (such as payroll, rent, mortgage, and utilities). However, under the CAA, expenses that may be eligible for forgiveness also include:

  • Covered operations costs (such as software, cloud computing services, or other human resources needs)
  • Covered property damage costs 
  • Covered supplier costs
  • Covered worker protection costs (such as personal protective equipment)
  • Certain group insurance payments (such as group life, disability, dental, and vision insurance benefits)

This list of expanded forgivable expenses applies to all PPP loan borrowers except for those who were already granted loan forgiveness.

Loan Amount

For Second Draw PPP loans, you can borrow up to 2.5× your average monthly payroll costs for the calendar year 2019. You cannot borrow more than $2 million.

There may be differences for seasonal employers and businesses that were not in existence before February 15, 2020. NAICS 72 entities can borrow up to 3.5× their average monthly payroll costs or $2 million, whichever is less.

Repayment & Forgiveness

You will be forgiven the full amount for any qualifying payments you make during the covered period with your Second Draw PPP loan. This covered period may span anywhere from 8 to 24 weeks after you first receive your PPP loan. You may elect a covered period within this time frame as well. Qualifying payments include those listed under the Use section above. 

For the loan to qualify for forgiveness, you must use at least 60% of the loan amount for payroll costs. You must also maintain your employee headcount. If you lay off employees, the amount of loan forgiveness you receive may be reduced accordingly.

If you receive a PPP loan of $150,000 or less, you’re eligible for a simplified forgiveness process (we will explain this in more detail in a later post).

What Do I Need to Do?

Click this link to learn more about what employers need to know about the Consolidated Appropriations Act of 2021.

If you’d like to apply for a Second Draw PPP loan, first check the eligibility requirements to confirm that you qualify. If you’re eligible, you may apply until May 31, 2021 or until funds run out. 

To complete the Second Draw PPP Borrower Application, you will need the following information:

  • Business identification and contact information
  • Average monthly payroll
  • Number of employees
  • Percentage of reduction in gross receipts 
  • PPP First Draw SBA loan number

Your payroll provider may help you gather this information. Please click here to access the Second Draw PPP Borrower Application Form. 

Check with your SBA 7(a) lender, bank, or credit union to make sure they’re participating in the program. You may also use LenderMatch or this map of lenders to find a participating lender near you. Please consult your financial advisor for further assistance.

If you receive a loan, be sure to comply with all PPP rules and regulations to ensure your loan’s forgiveness.

How Sentric Can Help

Sentric provides an easy-to-understand report that contains most of the information you need to complete the loan application. For more information about how Sentric can help, please contact one of our product experts.

For an overview of the CAA and its main provisions, please check out The Consolidated Appropriations Act of 2021 (CAA): What Employers Need to Know.

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