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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations
A Operates as a sole proprietorship or as an independent contractor, or is an eligible self-employed individual;
B reports farm income or expenses on a Schedule F IRS Form 1040; and C was in business as of February 15, 2020; is calculated according to ii or iii of this subsectione6, depending on whether the borrower has employees.
ii If a borrower meeting the criteria in subsection 6i of this section does not have any employees, the maximum loan amount is the product obtained by multiplying:
A The gross income of the borrower in 2019 or 2020, as reported on a Schedule F IRS Form 1040, that is not more than $100,000, divided by 12; and B 2.5.
iii If a borrower meeting the criteria in subsection 6i of this section has employees, the maximum loan amount is calculated as the lesser of:
A The product obtained by multiplying:
1 The sum of i the difference between gross income and employee payroll costs of the borrower in 2019 or 2020 at the election of the borrower, as reported on a Schedule F IRS Form 1040, that is not more than $100,000, divided by 12, and ii the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by 2 2.5; or B $2,000,000.
7 The maximum amount of a Second Draw PPP Loan to a borrower that has income from self-employment and files a Form 1040, Schedule C, is calculated as follows, depending on whether the borrower has employees:
i For a borrower that has income from self-employment and does not have any employees, the maximum loan amount is the lesser of:
A The product obtained by multiplying:
1 The net profit of the borrower in 2019 or 2020, as reported on IRS Form 1040 Schedule C, that is not more than $100,000, divided by 12; and 2 2.5 or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection f10 at the time of disbursement, 3.5.
ii For a borrower that has income from self-employment and has employees, the maximum loan amount is the lesser of:
A The product obtained by multiplying:
1 The sum of i the net profit of the borrower in 2019 or 2020 at the election of the borrower, as reported on IRS Form 1040 Schedule C, that is not more than $100,000, divided by 12; ii
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the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by 2 2.5 or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement as defined in subsection f10, 3.5; or B $2,000,000.
8 The maximum amount of a Second Draw PPP Loan to a borrower that files taxes as a partnership is calculated as the lesser of:
i The product obtained by multiplying:
A The sum of 1 net earnings from self-employment of individual general partners in 2019 or 2020 at the election of the borrower, as reported on IRS
Form 1065 K1, reduced by section 179
expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties, multiplied by 0.9235,37 that is not more than $100,000, divided by 12; 2 the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by B 2.5 or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection f10 at the time of disbursal, 3.5; or ii $2,000,000.
9 Businesses that are part of a single corporate group shall in no event receive more than $4,000,000 of Second Draw PPP Loans in the aggregate.
Corporate group has the same meaning as in subsection B4f of the Consolidated First Draw PPP IFR.
10 For purposes of calculating a borrowers maximum payroll costs, a borrower may multiply its average monthly payroll costs by 3.5 only if the borrower is in the Accommodation and Food Services sector and has reported a NAICS code beginning with 72 as its business activity code on its most recent IRS income tax return.
g How do I submit an application for a Second Draw PPP Loan and what documentation must I provide to demonstrate eligibility?
1 The applicant must submit to the lender SBA Form 2483SD Paycheck Protection Program Second Draw Borrower Application Form or the lenders equivalent form including the required certifications and the documentation in subsection g2.
37 This treatment follows the computation of selfemployment tax from IRS Form 1040 Schedule SE
Section A line 4 and removes the employer share of self-employment tax, consistent with how payroll costs for employees in the partnership are determined.

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2 At the time an applicant submits its loan application form, it must submit the following unless the documentation was submitted to the lender for the First Draw PPP Loan i.e., the applicant used calendar year 2019 figures to determine both its First Draw PPP Loan amount and its Second Draw PPP Loan amount, and the lender for the applicants Second Draw PPP Loan is the same as the lender that made the applicants First Draw PPP Loan:
i If the applicant is not selfemployed, the applicants 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 K1s.
ii If the applicant is self-employed and has employees, the applicants 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.
iii 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 selfemployed; 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.
iv For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue, as provided in subsectionc1iv, must be
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