Senate Passes Coronavirus Relief Bill, Expands Small Business Aid

The Senate on April 21 passed by voice vote the "Phase 3.5" Paycheck Protection Program and Health Care Enhancement Act. The $484 billion interim coronavirus relief measure would provide $310 billion for the Small Business Administration’s now-exhausted Paycheck Protection Program, $60 billion for disaster loans through the SBA's Economic Injury Disaster Loan (EIDL) program, and an additional $100 billion for health care provider relief ($75 billion) and coronavirus testing ($25 billion).

The House could meet as early as April 23 at 10 a.m. to consider the legislation. Below is a quick overview of the key provisions for our industry:

Paycheck Protection Program

• $60 billion dedicated to underserved communities such as minority and rural businesses. Of that $60 billion, $30 billion is set aside for banks and credit unions with assets between $10 billion and $50 billion. The other $30 billion is reserved for community banks, credit unions, and "community financial institutions" with assets of less than $10 billion. The bill defines community financial institutions as "minority depository institutions, certified development companies, microloan intermediaries, and state or federal credit unions."
• To review, the PPP allows businesses with 500 or fewer employees (with an exception allowing more than 500 employees for restaurants and hotels) to secure loans of up to two months of their average monthly payroll costs, plus 25 percent of that amount, to a maximum of $10 million.  The loans are forgiven if the company maintains its employee and compensation levels, and if the proceeds are used to cover payroll costs and most mortgage interest, rent and utility costs.  No more than 25 percent of the loan may be used for non-payroll expenses.

Economic Injury Disaster Loan Program

• The bill authorizes an additional $60 billion for the EIDL program, $10 billion of which is reserved for the EIDL Advance program, which provides $10k grants that don't have to be repaid for businesses hurt by the pandemic. 
• The EIDL, which is usually intended for victims of disasters like hurricanes and tornadoes, was made available on March 12 to businesses hurt by the coronavirus pandemic. Under the program, businesses with fewer than 500 employees (with exceptions for certain larger companies) can apply for a working capital loan of up to $2 million, at a rate of 3.75 percent for businesses with a term of up to 30 years.
• More information available here.