The second emergency stimulus bill provides additional funding for the SBA EIDL program; takes action to direct PPP loan funds to more small businesses

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The Paycheck Protection Program and Health Care Enhancement Act (the Act), a second round of emergency economic stimulus funding that was enacted on April 24, 2020, allocates $ 484 billion to replenish and supplement financial support for critical programs in under the CARES Act. The law aims, among other things, to replenish the depleted funds of the Small Business Administration (SBA) Paycheck Protection Program (PPP) and Economic Disaster Lending Program (EIDL) as shown below. .

Economic Disaster Lending Program (EIDL)

The second round of stimulus funding under the law injects additional funding into the SBA’s Economic Disaster Lending (EIDL) program, authorizing an additional $ 50 billion for EIDL loans and $ 10 billion for financial grants. emergency of the EIDL.

Under the EIDL program, small businesses affected by the COVID-19 pandemic can apply directly to the SBA for grants of up to $ 10,000 and loans of up to $ 2 million for working capital to pay fixed debts, payroll, accounts payable and other financial obligations. who could have been satisfied if the pandemic had not occurred. The first round of funding for the EIDL program ran out within weeks, and applicants already on hold will be screened on a “first come, first served” basis. These loans and advances are obtained directly from the SBA without the need to apply through a lender.

In addition to the increased funding, the law adds agricultural businesses with no more than 500 employees as eligible entities for EIDL grants and loans. Agricultural businesses are defined in Section 18 (b) of the Small Business Act as “businesses engaged in the production of food and fiber, ranching and rearing of livestock, aquaculture and all other industries. agricultural and related to agriculture ”.

Paycheque Protection Program (PPP)

The first round of stimulus funding for the Paycheck Protection Program (PPP) authorized $ 349 billion in funds, which were depleted within three weeks of the passage of the CARES law. Meanwhile, the SBA has approved over 1.6 million loans with an average amount of $ 206,000, but hundreds of thousands of applicants have not received funding.

The second round of stimulus funding under the law authorizes an additional $ 310 billion in funding for the PPP, so those with pending applications have another opportunity to obtain loans. The law specifically allocates a portion of the $ 310 billion to small financial institutions – $ 30 billion is reserved for lenders with less than $ 50 billion in assets, while $ 30 billion is reserved for lenders with less than $ 10 billion. dollars in assets.

By allocating these amounts to smaller lenders, Congress hopes that these funds will reach the small “smaller” businesses that did not receive funding in the first round. Loans are based on the wage costs of qualifying small businesses and can be canceled if used for wages, benefits, rent, and utilities. They are currently available until June 30, 2020.

The law did not include any changes to the existing process for obtaining a PPP loan or an EIDL loan or grant. However, the Treasury Department and the SBA continue to update their interim rules and guidelines, and we will continue to monitor you and keep you informed of new developments.

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