As we reported earlier, Congressional lawmakers and the Trump administration have been finalizing the fourth relief package to address the needs of the country as a result of the COVID-19 pandemic and resulting shut-downs.

On Thursday, April 23, the US House of Representatives will consider HR 266, the Paycheck Protection Program and Health Care Enhancement Act, which provides $383.4 billion to several COVID-19 relief programs previously funded through earlier legislation.

First, HR 266 provides an additional $310 billion in forgivable loans to small businesses and nonprofits under the Paycheck Protection Program (“PPP”). The PPP was initially funded with $349 billion meant for small businesses and 1.7 million businesses received these funds. However, many applicants did not receive any funds after the program ran out of money within two weeks of the program launching.  The bill requires $60 billion of this new loan amount to be reserved for loans processed by smaller financial institutions, including credit unions and minority-owned banks.

As we have highlighted before, loans provided through the PPP can be used to cover payroll, rent, mortgage payments, utilities, and other costs. If the business maintains employee and compensation levels or quickly re-hires laid-off employees compared to 2019 levels and uses at least 75% of the loan for payroll, then the loan will be forgiven. These loans do not require collateral or personal guarantees, unlike traditional loans.

For small businesses that missed out on the first round of PPP funding, it is imperative to get an application submitted to a bank familiar with the PPP loan process. These loans are approved on a first-come, first-served basis, so small businesses must act fast to potentially receive funds in this second round. Once HR 266 passes, there will be a small window of opportunity for small businesses to apply for these funds.

The bill also provides $50 billion to the Small Business Association (“SBA”) Economic Injury Disaster Loan (“EIDL”) program, bringing the total of that program to $350 billion in disaster loans to small businesses and appropriates another $10 billion for EIDL emergency grants. The program will also be expanded to include farming and agricultural-related businesses, which have traditionally been excluded from EIDL assistance.

We have helped our small-business and non-profit clients successfully obtain PPP loans and provided counsel on navigating the myriad issues that employers are facing during COVID-19. We also encourage small business owners to review our article on resiliency which highlights some business practices that will help those businesses weather this health and economic storm.

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