This article was last updated on 4/24/2020.
On March 27, 2020, Congress passed, and President Trump enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency health care and economic assistance during the COVID-19 global pandemic. One of the main provisions created by the CARES Act is an extension of lending by the Small Business Administration (SBA) known as the Paycheck Protection Program (PPP). The SBA began accepting PPP applications on Friday April 3, but available funds appropriated in the CARES Act were exhausted by Thursday, April 16. Since that time, Congress has been working on a plan to replenish those funds. On April 24, 2020, President Trump enacted the Paycheck Protection Program and Health Care Enhancement Act (Act) in order to increase funds for both the PPP program and a related SBA program, the Economic Injury Disaster Loan (EIDL) Program. The main tenets of this new Act are highlighted below.
One of the main purposes of the Act is to provide enhanced funding to the PPP program. The Act does so by appropriating approximately $320 billion additional dollars to the PPP program. In addition, the Act creates provisions intended to provide smaller banks with access to funds to allow them to help their clients who may not be able to apply through larger regional or national banks. These measures include provisions requiring that the SBA Administrator will guarantee that not less than $30 billion in loans will be made by insured depository institutions and credit unions with assets between $10 and $50 billion. The Act also requires that the Administrator guarantee at least $30 billion in loans made by community financial institutions, insured depository institutions, and credit unions with assets of less than $10 billion.
In addition to increasing PPP funding, the Act also provides enhanced funding for the EIDL program as it relates to the Covid-19 crisis. Specifically, an additional $10 billion dollars has been appropriated to the emergency grant program created by the CARES Act to aid businesses in economic distress due to COVID-19. In addition, another $50 billion has been authorized for direct loans under the EIDL program in order to prevent, prepare for, and respond to the novel coronavirus. Finally, the Act expands EIDL grant eligibility to agricultural enterprises with 500 or fewer employees.
Finally, the remainder of the Act provides funding relating to public health during the COVID-19 crisis. This includes increased funding for hospitals, COVID-19 testing, and other health-related items.
The COVID-19 pandemic has created a constantly-changing situation for businesses of every size and industry. As the Paycheck Protection Program and Health Care Enhancement Act is finalized, future legislation is developed, and additional challenges and opportunities are uncovered, P&N’s dedicated professionals are committed to understanding and applying this information to help our clients. Please contact us or connect with your P&N advisor to discuss your organization’s questions, concerns, and priorities.