Paycheck Protection Program, Small Business Administration Disaster Loans and Health Care Funding
Today, Congress passed a fourth legislative measure in response to the COVID-19 pandemic. This legislation focuses on additional funding for the Paycheck Protection Program for small businesses and nonprofits, additional funding for Small Business Administration Economic Injury Disaster Grants and Loans, and additional funding for hospitals and Coronavirus testing. The President has said that he will sign the legislation into law.
Small Business Administration
Paycheck Protection Program
The Paycheck Protection Program was created in the third legislative package, the CARES Act signed into law on March 27. It provides small businesses and nonprofits loans for up to 2½ months of payroll costs, up to $10 million, which are forgivable if a borrower meets conditions regarding use of funds and maintaining employees and salaries. The high-demand for the program caused the $349 billion in funds provided in the CARES Act to be depleted within 2 weeks. Today’s legislation adds $310 billion to the Paycheck Protection Program, with $60 billion set-aside for loans issued by smaller lenders. The program is still first-come, first-served. This additional funding brings the total program funding to $659 billion in lending.
Small Business Administration Disaster Loans
The CARES Act added $10 billion to the Small Business Administration’s Economic Injury Disaster Loan program. This fund was also quickly depleted due to high demand. Today’s legislation adds an additional $10 billion for Economic Injury Disaster grants and an additional $50 billion for loans. It also clarified that small agricultural enterprises, with up to 500 employees, will be eligible for these disaster grants and loans. Others eligible for the Economic Injury Disaster grants and loans include small business with up to 500 employees, sole proprietorships, independent contractors, self-employed individuals, private nonprofits and 501(c)(19) veterans organizations.
Health Care Funding
Public Health and Social Services Emergency Fund
Today’s legislation provides an additional $75 billion to the Department of Health and Human Services Public Health and Social Services Emergency Fund for health care providers and COVID-19 response. The CARES Act allocated $100 billion to this program. The Public Health and Social Services Emergency Fund can be used to reimburse providers for both loss of revenue and COVID-19-related expenses. Eligible entities include providers enrolled in Medicare and Medicaid and other nonprofit and for-profit entities that provide diagnoses, testing and care for patients with COVID-19.
The Public Health and Social Services Emergency Fund also received $25 billion for COVID-19 testing. This allocation is available for manufacturing and distributing tests, procuring personal protective equipment for testing and other testing-related activities or supplies. In addition, $1 billion of this fund is allocated to cover tests for uninsured individuals. Also, of the $25 billion, $11 billion is allocated for states, localities, territories and tribes, including $2 billion distributed according to the formula for 2019 Public Health Emergency Preparedness Cooperative Agreements, $4.25 billion by a formula based on the number of COVID-19 cases and $750 million for the Indian Health Service. States are required to submit their plans for COVID-19 testing to the Department of Health and Human Services within 30 days.
Leaders of the U.S. House of Representatives and Treasury Secretary Steven Mnuchin have said that they plan to work on another package of COVID-19 response measures when the House and Senate reconvene in May.
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