SPECIAL REPORT: Additional Funding Relief under the CARES Act
Further to our previous Special Reports on the CARES Act and the COVID-19 and Guidance on Small Business Loans, on April 21, 2020, the Senate approved a $484 billion relief package of additional funding. The bill will replenish funding for the Paycheck Protection Program and Economic Injury Disaster Loans, and provide some additional funding for hospitals and COVID-19 testing. The House is expected to vote and pass the current iteration of the bill on April 23, 2020. However, as always, the bill’s language is subject to further amendments before being passed by the House and signed into law.
Paycheck Protection Program (“PPP”). The Cares Act is being amended to provide the PPP with an additional $310 billion in funding for a total of $659 billion. The bill specifically sets aside $60 billion for community financial institutions, small insured depository institutions and credit unions with $30 billion for institutions with assets between $10 billion and $50 billion, and $30 billion for institutions with assets less than $10 billion.
Notably, the bill does not address the “loophole” that allowed certain larger and/or economically stable companies like you may have seen in the press lately to obtain PPP loans. At this time, it is unlikely that this “loophole” will be addressed through this legislation as the House is expected to pass the bill in its current form. However, U.S. Treasury Secretary Steven Mnuchin announced that a FAQ document would be released to further clarify the criteria for eligibility to receive PPP loans. Some companies have already announced that they would be returning the loans, and President Trump and Secretary Mnuchin are expected to ask other companies to follow suit.
The initial round of PPP funding was depleted within 14 days of its allotment. Thus, we recommend any current or potential applicants to follow up with their lender as to any existing applications or file a new application as soon as practicable because the new round of funding might not last long.
Economic Injury Disaster Loan (“EIDL”). The Cares Act is also being amended to provide EIDL grants with an additional $10 billion in funding for a total of $20 billion. The bill also authorizes $50 billion in additional funding for EIDL authorized by the SBA. Farms and other agriculture enterprises will now also eligible for EIDL and emergency grants. The bill also authorizes $2.1 billion in funding for additional salaries and expenses for the SBA to administer these programs.
The initial round of EIDL funding was also depleted soon after its allotment. We therefore recommend any current or potential applicants to follow up on any existing applications or file a new application as soon as practicable because the new round of EIDL funding also might not last long.
Healthcare Funding. The bill also provides $75 billion in additional funding for hospitals and health care to prevent, prepare for, and respond to COVID-19 and for necessary expenses to reimburse eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. Further, the bill authorizes $25 billion in additional funding for a “Public Health and Social Services Emergency Fund” to expand COVID-19 testing, manufacturing and procuring testing equipment and supplies, and other personal protective equipment. Of the newly appropriated funds for hospitals and healthcare, the bill specifically sets aside $11 billion for states and localities to develop, purchase, administer, process and analyze COVID-19 tests.
Please be aware that this information contained herein is current as of the date of the release of this Special Report and is subject to further changes and modifications by federal and local officials. If you have any questions or need additional information, please contact us.
CONTACT:
Andrew J. Annes, Esquire
aannes@satclaw.com
mobile: (312) 246-3110
John W. Campbell, Jr., Esquire
jcampbell@satclaw.com
mobile: (312) 391-3126
Websites:
https://satclaw.com/
https://www.satcsolutions.com/