COVID-19: Congress Approves Interim Emergency Relief Package
On Friday, April 24, 2020, President Trump signed another emergency relief package (CARES Act II) totaling close to $500 billion, the bulk of which will go toward replenishing the Paycheck Protection Program (PPP). Congress created the PPP as part of the first CARES Act (Cares Act I), but the original funds totaling $349 billion have already run out. The new PPP funds include parameters not found in the original bill, which should give smaller businesses a better chance at receiving funds. The CARES Act II also provides additional funds for the Economic Injury Disaster Loans (EIDL) program, as well as for hospitals and testing. The CARES Act II, however, does not provide any relief to state and local governments, which have been hit hard as a result of the coronavirus. The following is a summary of the CARES Act II.
PAYCHECK PROTECTION PROGRAM
The CARES Act II provides an additional $310 billion to replenish the PPP, with at least $60 billion set aside to target small businesses that bank with small, community, and midsized lenders. In response to concerns that small businesses that use small and community banks were not supported in the initial funding round, the interim relief pack has reserved no less than $30 billion for community-based lenders, small banks, and credit unions (assets less than $10 billion), and no less than $30 billion for midsized banks and credit unions (assets between $10 billion and $50 billion). The remaining $250 billion is unrestricted.
ECONOMIC INJURY DISASTER LOANS
The interim relief package provides an additional $60 billion to the EIDL program: $50 billion for EIDL loans and $10 billion for EIDL advance grants. Under the EIDL program, small businesses are eligible for up to $2 million in loans and $10,000 in advance grants. However, due to the overwhelming number of applications in the initial funding round, many businesses only received up to $15,000 in loans and $1,000 in advance grants.
Agricultural enterprises are now eligible to receive funds under the EIDL program.
The interim relief package provides $75 billion for hospitals and $25 billion to expand coronavirus testing.