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PPP Second Draw FAQs

Please note that Simmons Bank is continually working to update our resources as new information becomes available.

What is a Second Draw PPP Loan?

The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. Generally, Second Draw PPP Loans can be used to help fund payroll costs, including certain benefits. Funds may also be used to pay for mortgage interest, rent, utilities, certain worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.

Please see the SBA’s Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act (including question B. 11) for more information on the use of funds and what qualifies as eligible costs.

Can the Second Draw Loan be forgiven?

Your loan may qualify for forgiveness if certain conditions are met. Please see the SBA’s Interim Final Rule on Second Draw Loans (including section IV. (j)) for more information on forgiveness.

What are the requirements to obtain a Second Draw?

Borrowers who previously received a First Draw PPP loan in accordance with the SBA eligibility criteria may be eligible for a Second Draw if certain requirements are met.  Generally, the borrower must have  used, or will have used, the full amount of its First Draw PPP Loan (including the amount of any increase on such First Draw PPP Loan) on authorized uses on or before the expected date on which the Second Draw PPP Loan will be disbursed, must have 300 employees or less, and must have experienced revenue reduction of 25% of greater in 2020 relative to 2019.

To determine if you meet eligibility requirements, see the SBA’s Interim Final Rule on Second Draw Loans.

What are the terms of the loan?

  • The loan is 100 percent guaranteed by the SBA.
  • No collateral will be required.
  • No personal guarantees will be required.
  • The interest rate will be 100 basis points or 1%, calculated on a non-compounding, non-adjustable basis.
  • The maturity is five years.

Please see the SBA’s Interim Final Rule on Second Draw Loans for more information on the loan terms and conditions.

What is the maximum Second Draw loan amount?

For most applicants, the maximum loan amount for a Second Draw PPP Loan is 2.5 times certain of the borrower’s average monthly payroll costs, up to $2 million. Businesses who were assigned a NAICS code beginning with 72 at the time of disbursement may borrow 3.5 times the average monthly payroll costs, up to $2 million. The maximum annual salary per employee is $100,000.

Please see the SBA’s Interim Final Rule on Second Draw Loans (including section IV. (f)) for more information on calculating the maximum Second Draw loan amount.

Who is eligible for a Second Draw?

Many businesses are eligible for a First Draw Loan. To determine if you meet eligibility requirements, see the SBA’s Interim Final Rule on Second Draw Loans.

How do I apply for a Second Draw PPP Loan?

If your initial PPP loan was provided by Simmons Bank, please contact your local banker who facilitated your loan.

If this is your first PPP loan from Simmons Bank, or you do not have your banker’s contact information, please complete this PPP Inquiry form and a banker will contact you as soon as possible.

The program closes on March 31, 2021.

What documentation will I need?

Please submit the following along with your loan application:

  • If the applicant is not self-employed, the applicant’s Form 941 (or other tax forms containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate payroll), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, must be provided. A partnership must also include its IRS Form 1065 K-1s.
  • If the applicant is self-employed and has employees, the applicant’s 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate loan amount), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, if applicable, must be provided. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the applicant was in operation on February 15, 2020.
  • If the applicant is self-employed and does not have employees, the applicant must provide (a) its 2019 or 2020 (whichever was used to calculate loan amount) Form 1040 Schedule C; (b) a 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1099-MISC detailing nonemployee compensation received (box 7), invoice, bank statement, or book of record that establishes that the applicant is self-employed; and (c) a 2020 invoice, bank statement, or book of record to establish that the applicant was in operation on or around February 15, 2020.
  • For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue must be provided at the time of application, which may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant’s quarterly income statements or bank statements.
  • For loans with a principal amount of $150,000 or less, the applicant must submit documentation sufficient to establish that the applicant experienced a reduction in revenue on or before the date the borrower submits an application for loan forgiveness, or, if the borrower does not apply for loan forgiveness, at SBA’s request. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant’s quarterly income statements or bank statements.

Please see the SBA’s Interim Final Rule on Second Draw Loans (including section IV. (g)) for more information.

What is the “covered period”?

The “loan forgiveness covered period” is the period beginning on the date the lender disburses the PPP loan and ending on any date selected by the borrower that occurs during the period (i) beginning on the date that is 8 weeks after the date of disbursement and (ii) ending on the date that is 24 weeks after the date of disbursement.

Please see the SBA’s Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act for more information.

When will borrowers be required to begin paying principal and interest on a PPP loan?

If a borrower submits a loan forgiveness application within 10 months after the end of the loan forgiveness covered period, the borrower will not have to make any payments of principal or interest on the loan before the date on which SBA remits the loan forgiveness amount to the lender (or a determination is made that no loan forgiveness is allowed).

Please see the SBA’s Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act (including question B. 9) for more information.

How can I request loan forgiveness?

Your Simmons banker will work with you to submit a loan forgiveness request. Please see our PPP Loan Forgiveness FAQ page for further details.

Are borrowers required to provide demographic information?

To better understand which small businesses are benefiting from PPP, the SBA is requesting demographic information on PPP loan applications. Completion of these questions is optional and will not impact your ability to receive a loan. For additional information, please see PPP Loan Data – Key Aspects.

 

Additional details about Second Draw PPP Loans can be found in the Paycheck Protection Program Second Draw Loans Interim Final Rule (01-06-2021). And on the SBA’s PPP overview page.