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Existing PPP Borrowers: Second Draw PPP FAQ section

As of January 15, 2021; information subject to change without notice


When will the PPP Loan Program open for a Second Draw?

The SBA has not yet published a date for the re-launch of the PPP. Additional information about the SBA PPP, as amended by the Economic Aid Act, may be found at


How can I apply for a PPP loan with Watertown Savings Bank?

We are accepting SBA PPP Loan Applications for review through our WSB PPP Application portal. Once reviewed and pre-approved by WSB, completed applications can be submitted by WSB to the Small Business Association (SBA) for formal approval starting on Tuesday, January 19th. This portal will lead you through your PPP Loan application. As a Second Draw PPP Loan borrower, you will need your 10-digit SBA Loan Number to start your application. This loan number can be found on your original PPP Loan Note.

If you are not currently a WSB customer, upon submission of your application, we will require that you open a WSB checking account. This will enable us to take the government-required identification and documentation steps necessary to grant the loan.  If your loan is approved, we will fund your SBA loan using this account. You are under no obligation to continue to use the account after loan funding and you are not required to be a WSB customer to apply for a PPP Loan.  


Who Qualifies for Second Draw PPP Loan?

You qualify for a Second Draw PPP Loan if you're a business, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization, eligible for a First Draw PPP Loan, veteran’s organization, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or eligible nonprofit news organization that:

  • Has 300 or fewer employees.
  • Experienced a revenue reduction of 25% or greater in 2020 relative to 2019 (more on this below).
  • Received a First Draw PPP Loan
  • Have used, or will use, the full amount of the First Draw PPP Loan on or before the expected date on which the Second Draw PPP Loan is disbursed to the borrower.

A borrower that has temporarily closed or temporarily suspended its business remains eligible for a Second Draw PPP Loan.


What is the 25% Revenue Reduction Requirement?

In order to be eligible for a Second Draw PPP Loan, you must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019.

  • You must calculate this revenue reduction by comparing your quarterly gross receipts for one quarter in 2020 with your gross receipts for the corresponding quarter of 2019.
  • For example, if you have gross receipts of $50,000 in the second quarter of 2019 and gross receipts of $30,000 in the second quarter of 2020, you have experienced a revenue reduction of 40 percent between the quarters, and are therefore eligible for a Second Draw PPP loan (assuming all other eligibility criteria are met). 
  • To make this calculation, take your 2020 Quarter gross receipts and subtract your 2019 Quarter gross receipts, then divide that number by your 2019 Quarter gross receipts.  You can try this for each corresponding quarter in 2019 and 2020.
  • Any forgiveness amount of a First Draw PPP Loan that you received in 2020 should be excluded from your gross receipts.

If you were in operation in all four quarters of 2019, you are deemed to have experienced the required revenue reduction if you experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019, and you submit copies of your annual tax forms substantiating the revenue decline (see below for a full description of required documentation). This provision of the new law may be particularly helpful to small borrowers that may not have quarterly revenue information readily available.  


How do I document my 25% Revenue Reduction?

If your loan has a principal amount greater than $150,000, you must submit documentation adequate to establish that you experienced a revenue reduction of 25% or greater in 2020 relative to 2019. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, quarterly financial statements or bank statements. 

If your loan has a principal amount of $150,000 or less, documentation is not required at the time you submit your application for a loan, but you will be required to submit documentation when you apply for loan forgiveness.  If you cannot then document a 25% decrease in annual or quarter-to-quarter gross receipts at that time, your loan will not be forgiven by the SBA.


How do I calculate my payroll cost?

The maximum amount of the loan is the lesser of two and half months of your average monthly payroll costs or $2 million. The two and a half months salary calculation is the same as for First Draw loans, but the cap has been reduced to $2 million.

You have more flexibility in the relative time period for calculating your payroll costs. You can use either calendar year 2020 or calendar year 2019.

If you are in the food service industry, you are eligible for a loan amount of three and one half months’ salary.

Eligible Seasonal Employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020. 


How do I document my payroll cost for my Second Draw PPP Loan?

The documentation required to substantiate your payroll cost calculation is generally the same as documents required for First Draw PPP Loans.  Because of that, you won’t need to submit additional payroll documentation to substantiate payroll costs if you:

  • used calendar year 2019 figures to determine its First Draw PPP Loan amount,
  • used the calendar year 2019 figures to determine its Second Draw PPP Loan amount, and
  • your First Draw PPP loan is with WSB

If you did not use WSB for your First Draw, you will be asked to re-submit the payroll documentation you provided your bank for your First Draw PPP Loan.


How can Second Draw PPP loans be used?

Borrowers are still required to spend at least 60% of the funds on payroll over a covered period of either 8 or 24 weeks to receive full forgiveness.

You may use the proceeds of a PPP loan for:

  1. payroll costs (must be at least 60% of expenditures);
  2. costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums;
  3. mortgage interest payments (but not mortgage prepayments or principal payments);
  4. rent payments;
  5. utility payments;
  6. interest payments on any other debt obligations that were incurred before February 15, 2020;
  7. refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020;
  8. certain covered operations expenditures (payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses);
  9. certain covered property damage costs (costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation);
  10. certain covered supplier costs 
  11. certain covered worker protection expenditures operating or a capital expenditures to facilitate the adaptation of the business activities due to Covid (e.g., PPE, glass barriers, etc.).


Are Second Draw PPP Loans eligible for loan forgiveness?

Second Draw PPP Loans are eligible for loan forgiveness on the same terms and conditions as First Draw PPP Loans, except that Second Draw PPP Loan borrowers with a principal amount of $150,000 or less are required to provide documentation of revenue reduction, if such documentation was not provided at the time of the loan application.


Are my business expenses paid for with the proceeds of my forgiven PPP loan tax deductible?

Yes.  Corresponding expenses are now deductible for all PPP loans.


What steps has the SBA taken to ensure increased access to PPP loans for minority, underserved, veteran, and women-owned businesses?

SBA set aside $15 billion across first and second draw PPP loans in this round of funding for lending by community financial institutions like Watertown Savings Bank. SBA will be accepting PPP loan applications only from community financial institutions for at least the first two days when the PPP loan portal re-opens. 

In addition, SBA has added a demographic reporting section on the PPP borrower application. We strongly encourage all borrowers to report the optional information that has been added to better inform us and SBA on the success of our efforts to reach underserved, minority-owned, veteran-owned, and women-owned businesses.

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