Ready to Help your Business Again - Second Draw PPP Loan
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Ready to Help
your Business
Again
Second Draw PPP Loan
SBA Paycheck Protection Program
With the approval of the PPP Extension Act of 2021, the US Government extended the Paycheck Protection
Program (PPP). The PPP Extension Act of 2021 extends the SBA’s authority to receive new PPP loans applications
until May 31, 2021.
Here is a guide that summarizes the benefits and main points to apply for your second PPP loan. This Guide
provides general information on the PPP based on SBA guidance available as of the date hereof. The information
provided is subject to change at any time, as the SBA modifies or provides additional guidance with respect to the
program. We recommend reviewing it regularly. For details and definitive guidance on the program, please visit
the SBA website at: www.sba.gov/ppp
The Paycheck Protection Program offers:
• Possible forgiveness by the SBA of the borrower’s loan if at least 60% of the loan is used for payroll and
the remaining 40% is used for one or more of the eligible costs mentioned below
• An interest rate for the non-forgiven portion of, 1% for a 5-year term
• A forbearance on payment of principal and interest for the first 16 months from the date of disbursement
or, if you request loan forgiveness during that period, until SBA approves or denies the loan forgiveness
• $0 in SBA guaranty fee payments
• Does not require an unlimited personal guarantee from owners or shareholders
• Does not require any asset belonging to the business, its owners, or shareholders to be used as collateral
As established by the US Government, the deadline to apply to the Program is May 31, 2021. We encourage you to
visit popular.com/ppp to stay informed about the updates of the Program and to learn Popular’s deadline to
receive applications to ensure that we have the necessary time to evaluate them and refer them to the SBA.
If you already have a PPP loan (granted on 2020) that is not with Banco Popular and wish to apply for a second
PPP loan, you should submit your application through the original lender.
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SMELIGIBILITY REQUIREMENTS
Businesses that were operating on or near February 15, 2020
Businesses that have already received their first PPP loan and that will have used all the funds prior to
disbursement of the second PPP loan
Businesses that experienced a reduction of at least 25% of their gross revenue from 2019 to 2020 or their
gross revenue in any quarter of 2020 in comparison with the same quarter of 2019, at the client’s choice
ELIGIBLE BUSINESSES
The following businesses are eligible to receive a second PPP loan:
Businesses that employ 300 or fewer employees
Businesses with a sole proprietor
Individuals who operate as independent contractors
Individuals who are self-employed and use a business name
Nonprofit organizations, qualified under section 501(c)(3), and veterans’ organizations under section
501(c)(19), that employ 300 or fewer employees
A housing cooperative, an eligible organization under section 501(c)(6) or an eligible destination marketing
organization, employing no more than 300 employees
A news organization that is majority owned or controlled by a business with NAICS 511110 or 5151 or a
nonprofit public broadcaster with a trade or business under NAICS 511110 or 5151, employing no more than
300 employees per location (or, if applicable, the standard size in number of employees stated by the SBA in
13 CFR 121.201 for its industry)
INELIGIBLE BUSINESSES
The following businesses are not eligible to receive a second PPP loan:
Businesses that were not operating as of February 15, 2020
Permanently closed businesses (cannot reopen to receive a PPP loan)
Applicant or applicant’s owner who is undergoing bankruptcy proceedings, either at the time of filing the
application or at any time before the PPP is disbursed
Businesses engaged in or involved in any activity that is deemed illegal under federal, state, or local laws
A domestic employer (employing babysitters, house cleaners, etc.)
If the applicant or any business owned or controlled by the applicant or any of its owners, who has ever
obtained a direct or guaranteed loan from the SBA or any other federal agency, is currently in delinquency
or has defaulted on that debt in the last seven years and caused a loss to the federal government
If an owner of 20% or more of the applicant’s equity is currently incarcerated or, due to any felony, is
currently subject to a formal indictment, criminal information, arraignment, or other means by which formal
criminal charges are brought in any jurisdiction; or has been convicted, pleaded guilty or did not contest
charges, or started any form of probation or parole (including pretrial probation) for a felony involving fraud,
bribery, embezzlement or a false statement on a loan application or an application for federal financial
assistance within the past five years or any other felony within the past year
Applicants who received or will receive a grant from the Shuttered Venue Operator Grant Program under
section 324 of the Economic Aid Act
Businesses whose stocks are traded on an exchange registered as a national stock exchange under section 6
of the Securities Exchange Act of 1934
Hedge fund or private equity firms
Entities in which the President, the Vice President, the head of an Executive department, or a Member of
Congress, or the spouse of such person owns, controls, or holds at least 20 percent of any class of equity
A business concern or entity primarily engaged in political activities or lobbying activities, including any
entity that is organized for research or for engaging in advocacy in areas such as public policy or political
strategy or that describes itself as a think tank in any public documents
2Any business concern or entity: (i) for which an entity created in or organized under the laws of the People’s
Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in
the People’s Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or
indirectly, not less than 20 percent of the economic interest of the business concern or entity, including as
equity shares or a capital or profit interest in a limited liability company or partnership; or (ii) that retains, as
a member of the board of directors of the business concern, a person who is a resident of the People’s
Republic of China
Any person required to submit a registration statement under Section 2 of the Foreign Agents
Registration Act of 1938 (22 U.S.C. 612)
USE OF ELIGIBLE FUNDS
Eligible payroll costs defined in the CARES Act and Economic Aid Act (for more details see the section on
inclusions and exclusions for businesses)
Costs related to continuity of group health insurance, life, disability, vision, or dental benefits
Interest on mortgage loans (does not include prepayments or principal payments)
Rent
Utilities
Interest on any debt incurred before February 15, 2020
Operational expenses (payments for any business software or cloud services that facilitate business
operations, product or service deliveries; processing, payment or tracking of payroll expenses; human
resources; sales and billing functions or accounting or tracking of supplies, inventory, records and expenses)
Costs to cover property damage (costs related to property damage and vandalism or looting due to public
disturbances that took place during 2020 and which were not covered by insurance or other compensation)
Costs to cover suppliers (expenses incurred by the business to a supplier of goods for the provision of
goods, that: (a) are essential for operating the business at the time the expense is incurred; and (b) are
incurred in compliance with a contract, order or purchase order in effect at any time prior to the covered
period with respect to the applicable covered loan)
Employee protection expenses:
- (A) Operational or capital expenses to facilitate the adaptation of an entity’s business activities to meet
established requirements or guidance issued by the Department of Health and Human Services, the
Centers for Disease Control or the Health and Safety Administration, or any established equivalent
requirement or guidance issued by a state or local government, during the period beginning on March 1,
2020 and ending on the date the national emergency associated to COVID-19 expires in terms of
maintaining sanitation standards, social distancing or any other worker or client safety requirements
related to COVID-19;
- (B) such expenses may include: (i) purchasing, maintaining or renovating assets to create or expand: (I) a
drive-through access window; (II) a ventilation or air filtration system or pressure-combined air or indoor,
outdoor or combined air; (III) a physical barrier like a sneeze guard; (IV) an expansion of additional
indoor, outdoor, or combined commercial space; (V) an on-site or off-site health detection capability; or
(VI) other assets related to compliance with the requirements or guidance described in subparagraph
(A), as determined by the Administrator in consultation with the Secretary of Health and Human Services
and the Secretary of Labor; and (ii) the purchase of – (I) covered materials described in section 328.103
(a) of title 44, Code of Federal Regulations, or any successive regulation; (II) respirator masks with
particulate filter approved by the National Institute for Occupational Safety and Health, including those
approved for use only under emergency authorization; or (III) other types of personal protective
equipment, as determined by the Administrator in consultation with the Secretary of Health and Human
Services and the Secretary of Labor; and
- (C) said expenses do not include residential real estate or intangible property
PAYROLL COSTS INCLUSIONS
Compensation for employees whose main residence is located in the United States or its territories
Wages, commissions, or any similar compensation
Tips or any similar payment
Payments for sick, vacation, medical or family leave
Payments (allowance) for dismissal or layoffs
3Group health insurance payments
Payments for retirement benefits
State or local taxes withheld from the employee
Included for sole proprietors, individuals operating as independent contractors, and individuals who are
self-employed using a business name:
The sum of all compensation or income received as wages, commission, net income, or any similar
compensation, not to exceed $100,000
PAYROLL COSTS EXCLUSIONS
Compensation for employees whose primary residence is outside the United States or its territories
Compensation for employees or owners in excess of an annual salary of $100,000
Employers’ payroll tax (federal and state)
Income taxes
Credits for sick leave, earned under Public Law 116-5-127, the Families First Coronavirus Response Act
LOAN AMOUNT CALCULATION
Maximum loan amount = 2.5 times x the monthly average of payroll costs incurred during the
year 2019 or the year 2020 up to a maximum of $2 million.
Total Total PAYROLL
INCLUSIONS - EXCLUSIONS = costs
EXAMPLE:
Loan Amount Calculation
Annual Total Monthly Average 2.5 times
Payroll cost
$3,600,000 $300,000 $750,000
(net of exclusions)
Loan amount $750,000
That is, the annual total of $3,600,000 / 12 months = $300,000 x 2.5
* For clients belonging to the NAICS 72 Accommodation and Food Services sector, the calculation will be
based on 3.5 times the average monthly payroll.
REQUIRED DOCUMENTS
To complete your application, you must have the following available:
Evidence that the business was operating as of February 15, 2020
The payroll calculation for the year 2019 or 2020, as used to determine the financing amount
4Evidence of payroll costs:
• For employers who pay payroll with withholding (one of the following documents from 2019 or 2020):
- PR Treasury’s Form 499 R-3
- IRS 940 Annual Form
- IRS 941 Quarterly Return
• For sole proprietor businesses, independent contractors, and individuals who are self-employed and use
a business name (DBA):
- 2019 or 2020 tax return; and
- Evidence of self-employment (i.e. PR Treasury’s Form 480.6SP for 2019 or 2020, invoices or bank
statements)
Evidence of 25% reduction of gross revenue:
• 2019 and 2020 tax returns or quarterly financial statements or bank statements
ADDITIONAL REQUIREMENTS
The applicant will have to make certain certifications within the application document and provide, as
required, certain additional documentation to the bank to verify compliance with all program requirements
The restrictions of the 7(a) Program regarding affiliated entities apply to certain eligible businesses
If the applicant is not a customer of the Bank, must open a commercial account and complete the Bank’s
Know Your Customer process
HOW TO APPLY FOR THE NEW ROUND OF PPP LOANS
1. Have the required documents on hand to fill out the application
2. Sign up on the digital platform. If you already have a PPP loan from the first round, you can access the
platform with the username and password previously created. If you do not know your credentials, you may
reference the email that we sent through sbaforgiveness@popular.com
3. Complete your application and provide the required documents
You may submit, check the status and administer your PPP loan application solely through the digital platform.
Once you have started the process, all the communications related to the PPP, including required documents
and follow up messages, will be sent through email.
LOAN FORGIVENESS
We are in the early stages of the Program therefore we will notify you with updated information as soon as the
SBA provides it.
However, remember that the loan can be forgiven in its entirety if you show that the funds were used for the
abovementioned eligible costs and that at least 60% of such funds were used for payroll costs.
Loan forgiveness is not automatic; thus, you can apply for it eventually through Popular.
For more information about the program, please go to: www.sba.gov/ppp
IMPORTANT CLARIFICATION TO ALL APPLICANTS:
The SBA does not authorize funds received from the Paycheck Protection Program (PPP) to be used to make payments to representatives or
agents (including attorneys, accountants, or other intermediaries, hereinafter the “Representatives”) who have assisted businesses with the
application for a PPP loan, forgiveness of a PPP loan, or amendments to an existing PPP loan or have acted as intermediaries. Banco Popular
will not pay charges billed by Representatives, unless such charges have been expressly pre-approved for the purpose of collecting Banco
Popular’s service charge. All applicants must clearly understand that by applying for a PPP loan, forgiveness of a PPP loan, or amendments
to an existing PPP loan to Banco Popular, applicants expressly agree that they will be solely responsible for any fees, expenses or charges
claimed by any Representative assisting clients with any such application or otherwise serving as an intermediary.
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