The Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020, contained the Paycheck Protection Program (“PPP”), a $349 billion financial relief measure for, generally, small businesses. The PPP provides loans to small businesses and nonprofit organizations. To the extent that the funds from the loans are spent during an eight-week period after funding on qualified costs and certain other requirements are met, the loans are forgiven tax-free. The program launched on April 3. The program was out of money on April 16.
Yesterday (April 21, 2020), the Senate passed a $484 billion bill entitled the “Paycheck Protection Program and Health Care Enhancement Act.” The bill is expected to be approved by the House of Representatives tomorrow. President Trump has said that he would sign the bill into law promptly.
The bill provides for $310 billion to replenish the PPP, with $60 billion set aside for small, midsize, and community lenders, which Democrats say can better serve “under-banked” small businesses.
The bill adds $60 billion to the Economic Injury Disaster Loan fund – $50 billion for loans and $10 billion for grants.
$75 billion is appropriated for hospitals, with a bias toward rural hospitals.
$25 billion is appropriated for a number of COVID-19 testing initiatives. The bill mandates that the Trump administration establish a national strategy to help states and localities test for the COVID-19. States and localities are required to outline their own plans for testing.
This legislation brings to about $2.7 trillion the amount of federal aid that Congress has approved in the past six weeks in response to the COVID-19 health and economic crises. It is clearly considered an interim measure and has been dubbed by some as “Phase 3.5.” Discussions about Phase 4 relief will begin in earnest when this bill is signed into law in the next few days.
If you have a PPP loan request pending, check with your lender to confirm that you are still in the queue for approval and determine the expected timetable. If you have not requested a loan yet and you think that you may qualify, you should contact lenders to see if you can start the process. Act now.
If you need help with your PPP loan request or have any other questions about this legislation, contact your HM&M advisor.
For more information check out HM&M’s COVID-19 Resources page.
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