Phase ‘3.5’ - Congress’ Interim Emergency Relief Legislation Marshalls $450 Billion to Bolster the Paycheck Protection Program

In response to the quick depletion of funds from the Paycheck Protection Program (the PPP) and the inability of many applicants to access relief, Congress has reached an agreement on interim emergency relief legislation to provide more than $450 billion in new funding to COVID-19 relief programs established under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) (the CARES Act). In addition to providing increased funding for the PPP and Emergency Economic Injury Disaster (EIDL) Grants, this legislation provides additional funding for health systems and hospitals to provide relief for COVID-19-related expenses and lost revenue, and to the Public Health and Social Services Emergency Fund to increase testing and contact tracing capabilities.

With the passage of H.R. 266, Paycheck Protection Program and Health Care Enhancement Act (the New PPP Act), the PPP will receive $310 billion in additional funding, of which approximately $60 billion will be earmarked for small lenders and community-based financial institutions – with a focus on rural, minority, and women-owned businesses. This focus on providing relief to underbanked and underserved small businesses and nonprofits was motivated by the difficulty encountered by these entities in accessing the PPP because they did not have prior relationships with large banks. By dedicating funds for small lenders and community-based financial institutions, the New PPP Act seeks to provide much-needed financial support to small businesses.

Strikingly, as the PPP gets refueled, state and local governments are left without significant legislative relief to address looming budgetary shortfalls caused by declining state revenues. The New PPP Act omits the $500 billion in additional aid for state and local governments sought by the National Governors Association. While Congressional leaders were able to secure a commitment from Steven Mnuchin, the Treasury secretary, that he will support additional state and local relief in the next COVID-19 legislation, Senator Mitch McConnell has indicated that such support is not a sure thing.

The New PPP Act will include funding for the following national priorities:

  • $310 billion in additional funding to the SBA Paycheck Protection Program.
    • Of this amount, $60 billion in additional PPP funding is dedicated to small lenders and community-based financial institutions. Of that $60 billion, (i) $30 billion is set aside for loans made by Insured Depository Institutions and Credit Unions with assets between $10 billion and $50 billion, and (ii) $30 billion is set aside for loans made by Community Financial Institutions (minority depository institutions, certified development companies, microloan intermediaries and State or Federal Credit Unions), Small Insured Depository Institutions and Credit Unions with assets less than $10 billion.
  • $50 billion for the SBA’s Economic Injury Disaster Loans from the “Disaster Loans Program Account”. The New PPP Act allows agricultural enterprises with no more than 500 employees to receive these grants and loans.
  • $10 billion for the SBA’s Emergency Economic Injury Disaster Grant program.
  • $75 billion additional in emergency money for the health system to reimburse hospitals and healthcare providers to support COVID-related expenses and lost revenue. The applicable language remains the same as in the CARES Act.  Healthcare providers eligible to receive relief under this provision are public entities, Medicare or Medicaid enrolled suppliers and providers, and other for profit and nonprofit entities that provide diagnoses, testing or cares for those with COVID. Funds can be used for building or construction of temporary structures, leasing of properties, medical supplies and equipment and PPE and testing supplies.
  • $25 billion for the Public Health and Social Services Emergency Fund to increase testing and contact tracing capabilities.
    • $11 billion dedicated to state and local governments to scale up testing capabilities.
    • $1 billion dedicated to CDC for surveillance and contact tracing.
    • $1.8 billion dedicated to the NIH to develop testing and relating technologies.
    • $1 billion dedicated to the Biomedical Advanced Research and Development Authority for research and development of COVID related supplies.

President Trump signed the New PPP Act into law on Friday, April 24, 2020.


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