Today, April 24, 2020, President Trump signed a $484 billion Paycheck Protection Program and Healthcare Enhancement Act into law. The legislation includes:
- $310 billion in new funds for the Paycheck Protection Program, which provides small business loans that can be forgiven if used for wages, benefits, rent and utilities. $60 billion of this amount is set aside for use by small and mid-size lenders. Click here to view our article on the PPP and How to Apply. Click here to view our article on Best Practice for Organizations Who Receive a PPP Loan and How to Maximize Loan Forgiveness.
- $60 billion for Small Business Administration (SBA) disaster assistance loans (EIDL) and grants.
- $75 billion in grants to hospitals dealing with a flood of patients.
- $25 billion to bolster coronavirus testing, a key part of efforts to reopen the economy.
The package becomes the fourth passed by Congress to respond to the outbreak, with a total cost approaching $3 trillion.
The popular PPP ran out of funding last week. Congress and the White House have been negotiating a deal to add additional funds to the loan program and ensure the PPP loans are going to small businesses who need it the most.
$60 Billion Set Aside for Small and Mid-Size Lenders. The PPP Enhancement Act requires the SBA to set aside $60 billion of the newly authorized $310 billion of PPP funds for PPP loans issued by:
- Community development financial institutions;
- Minority depository institutions;
- Development companies that are certified under title V of the Small Business Investment Act of 1958;
- Intermediaries under the SBA’s Microloan Program, as defined in Section 7(m)(11) of the Small Business Act;
- State and federal credit unions with less than $50 billion of assets; and
- Depository institutions with less than $50 billion in assets.
The $60 billion set-aside is further subdivided so that $30 billion would be earmarked for PPP loans made by insured depository institutions and credit unions with at least $10 billion and less than $50 billion in assets, while the other $30 billion would be earmarked for PPP loans by depository institutions and credit unions with assets of less than $10 billion.
EIDL Eligibility Expansion. Under the PPP Enhancement Act, agricultural enterprises — defined in Section 18(a) of the Small Business Act as “small business concerns engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries” — with 500 or fewer employees will be eligible for EIDL and emergency grants.
Please click here for the SBA FAQs page, which is updated regularly.
Please click here for the SBA interim final rule issued April 2. Click here for the interim final rule issued April 14, which provides guidance for self-employed persons, among other things. Click here for the Treasury Department’s page with details on the PPP and EIDL programs.
If your business wasn’t the recipient of funds from the first PPP tranche, there is still hope. The SBA and the Treasury Department announced that applications for this second tranche of funds will be accepted starting at 10:30 on Monday, April 27.
We will continue to update you as we get more information on Coronavirus-related legislation and guidance that may impact you. Continue to check back here for the most up to date tax information and changes in response to Coronavirus. If you have more questions contact an MCB Advisor at 703-218-3600 or click here.
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