April 27, 2020
This week Congress provided further relief for businesses and healthcare institutions through additional funding for the record stimulus deal in response to the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES) provided for Paycheck Protection Program (PPP) loans to qualified businesses with forgiveness components. Details on these portions can be found here and here. The Senate passed Paycheck Protection Program and Health Care Enhancement Act, H.R. 266 on April 21, 2020. It was later approved by the House on Thursday April 23, 2020, and ultimately signed by the President on Friday April 24, 2020. Here’s a link to the full text of the Act.
The purpose of this Act was to refill the PPP and Economic Injury Disaster Loans (EIDL) and Emergency Grants that were initially authorized under the CARES Act. The nation, and lenders, saw a rush and within 13 days of the loan applications being made available, the initial funds were exhausted. A chart of where the first round of funds went is here.
Division A-Small Business Programs
- Commitments for 7(a) or PPP Loans from the CARES Act was modified to replace $349 billion with $659 billion, an increase of $310 billion.
- Direct appropriations within the CARES Act for the PPP was modified to replace $349 billion with $670 billion, an increase of $321 billion, the difference from above is presumably to cover the accrued interest that is also potentially forgivable and lender fees for loan origination.
- The Act also set aside $30 billion of these refilled PPP funds for depository lenders and credit unions with between $10 billion and $50 billion in consolidated assets in an effort to provide access to those with middle market financial institution relationships.
- An additional $30 billion of the refilled PPP funds was set aside for community financial institutions (defined in the Act), depository institutions, and credit unions with under $10 billion in consolidated assets in an effort to provide access to those with smaller financial institution relationships.
- Appropriations of an additional $10 billion were added for EIDL grants doubling the total amount initially made available.
In short, if you missed out on round 1 of the PPP, now is the time to act. Hopefully you have all your documentation lined up and ready to go for the loan application. Additional resources including the loan application can be found here.
As your trusted advisors, we are committed to keeping you well-informed with any new legislation passed by Congress as well as any new pronouncements by the Department of Treasury that may affect you. Please do not hesitate to reach out to KHA with any additional questions you may have.
These sources are simply included for informational purposes. KHA Accountants, PLLC, its partners and others do not provide any assurance as to the accuracy of these items or the information included therein. As such, KHA Accountants, PLLC cannot be held liable for any information derived from referenced sources. This by no means is a recommendation to obtain a loan or attempt to apply for a loan. Consult your legal and business advisors prior to making financing decisions. This is intended for illustrative and discussion purposes only.