On April 24, President Trump signed a new bill, providing $484 billion to replenish the Paycheck Protection Program (PPP) lending program and the Economic Emergency Injury Disaster Loan (EIDL) program. There is also funding for hospitals and COVID-19 testing. Specifically:
- $310 billion for PPP, with $60 billion set aside for smaller lending institutions
- $60 billion in additional funds for the EIDL program:
- $50 billion for new EIDL loans
- $10 billion for EIDL grants
- Eligibility for the EIDL grants was also expanded to include agricultural business
- $75 billion in additional funds for Public Health and Social Services Emergency Fund for reimbursements to hospitals and healthcare providers
- $25 billion to support expanded COVID-19 testing.
PPP
The first $349 billion of PPP funding ran out in mid-April. It had approved more than 1.6 million loans from almost 5,000 lenders. The new funding sets aside money for smaller banks and credit unions. There was criticism that the initial funds went to many larger companies and small businesses were left out.
In response, the Small Business Administration (SBA) has updated its PPP FAQs to address some of the criticism from the first PPP package. Specifically, it says that:
- Borrowers “must certify in good faith that their PPP loan request is necessary.”
- Before submitting an application, borrowers should should review the certification that states “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
- Borrowers should assess the ability to access other sources of funds to support their business.
Further, the SBA states, “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.
EIDL
Agricultural businesses, with less than 500 employees, are now eligible for EIDL grants and loans.
This new legislation provides an additional $50 billion to make EIDL loans. Entities can apply for a working capital loan of up to $2 million, at a rate of 3.75% for businesses and 2.75% for nonprofits, with a term of up to 30 years.
The initial $10 billion amount for EIDL grants has been doubled in this new $10 billion in additional funding. This grant also includes an option for a $10,000 case advance within three days of the application, that does not have to be paid back, even if the borrower’s application is later denied. This $10,000 grant must be used for:
- Providing paid sick leave to employees unable to work due to COVID-19
- Maintaining payroll to retain employees during business disruptions or substantial slowdowns
- Meeting increased costs to obtain materials due to interruptions in supply chains
- Making rent or mortgage payments
- Repaying obligations that cannot be met due to loss of revenue
Healthcare
This new relief bill has an additional $75 billion in funding to Public Health and Social Services Emergency Fund. This fund is sometimes called the Provider Relief Fund. This fund was created to distribute relief through grants or other mechanisms to eligible providers for COVID-19-related healthcare expenses or lost revenue. Distribution of those funds has already begun to providers that billed Medicare in 2019, in the form of grants that are intended to cover non-reimbursable COVID-19 expenses.
COVID-19 Testing
This new bill includes $25 billion for necessary expenses to research, develop, validate, manufacture, purchase, administer and expand capacity for COVID-19 tests. The largest block of funding is designated for states, localities, territories and tribes. Out of this amount, $4.25 billion will go to areas based on the number of COVID-19 cases.
We are continuing to monitor updates to the COVID-19 funding programs. Please contact your HW&Co. advisor with any questions you may have.
