On Thursday evening, the U.S. House of Representatives passed the Paycheck Protection Program and Health Care Enhancement Act following passage earlier in the week by the U.S. Senate. Once signed by President Trump, this measure will infuse an additional $484B into various measures intended to stem the COVID-19 impact on small businesses and healthcare providers.

The Act replenishes the Paycheck Protection Program (PPP), which was originally introduced as part of the CARES Act. The original allotment of funds for this program was quickly exhausted, which led to a sense of urgency by the U.S. Congress to provide additional funds to help support small businesses as the economy remains stifled by the global pandemic.

The Act provides the following funds:

• $310B will be allocated to the PPP, of which $60B is specifically earmarked for distribution through small banks, credit unions, minority-owned banks, and other small lenders. This is intended to address challenges that small businesses experienced in getting PPP loans when the program was originally launched.
• $60B will be allocated to the SBA’s Economic Injury Disaster Loan (EIDL) program, which provides favorable financing for small businesses impacted by the crisis. Unlike the PPP, which only allows funds to be used for payroll costs, rent, utilities, and mortgage interest, EIDL loans may be used for accounts payable, payroll, fixed debts, and other bills. $10B of the $60B for the EIDL program will be provided as grants of up to $10,000 for disaster relief.

It is expected that the additional PPP funds will be disbursed quickly once they become available. If a company has not yet received a PPP loan and intends to do apply, they must act quickly by submitting a loan application through an approved lender. Due to the stress caused on the banking system from the first round of PPP loans, banks have taken different positions on how they will process additional loans. Many banks are prioritizing previously submitted applications and will not be accepting new prospective clients. For additional information, please reference the following links:

SBA Paycheck Protection Program

SBA Economic Injury Disaster Loan

AICPA PPP Loan Calculators

Please contact your RS&F Client Advisor for additional details regarding this latest legislation or any previously passed stimulus measures.