On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) into law. The CARES Act contained a program called the Paycheck Protection Program (PPP), which was intended to provide critical benefits to small businesses impacted by the economic fallout caused by the Coronavirus.
The Paycheck Protection Program initially provided $349 billion in aid to small businesses. Unfortunately, the funds were depleted within just 13 days after the Program became operational. Additionally, as written, the Paycheck Protection Program enabled hundreds of millions of dollars to be claimed by large, publicly traded companies. The past few weeks, the President and Congress have been searching for a solution to the problems.
On Tuesday, April 21, 2020, the Senate approved the Paycheck Protection Program and Health Care Enhancement Act. This new legislation allocates an additional $310 billion to the Paycheck Protection Program. This time around, the legislation appropriates $30 billion in loans to lenders with less than $10 billion in assets and $30 billion in loans to lenders with between $10 and $50 billion in assets. The new legislation also doubles the amount of Economic Injury Disaster Loan (EIDL) Grants by providing an additional $10 billion in funding. The EIDL grant program allows up to $10,000 in loans to be forgiven.
The additional funds specifically allocated to smaller lenders coupled with the pressure on larger banks to cease favorable lending to larger corporations should allow many more small businesses to obtain relief under the Paycheck Protection Program and EIDL Program. The legislation is anticipated to be approved by the U.S. House of Representatives today and the President is expected to sign thereafter. Even though the legislation has not been approved, it is imperative to start the application process as soon as possible because there will likely be a backlog of applications.
If you have any questions or concerns about how the legislation might affect your business, please do not hesitate to contact any one of our attorneys.
Please check out our original blog post about the Paycheck Protection Program and CARES Act here:
Third Stimulus Package: CARES Act