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The New Small Business Stimulus: PPP Funding and More


Small business owners who missed out on the first round of PPP loans and EIDL grants will have another shot. Congress has approved what’s officially called the Paycheck Protection Program and Health Care Enhancement Act – and informally dubbed Stimulus 3.5. (The third stimulus bill is the $2 trillion CARES Act). The bill was signed into law by President Trump on Friday, with lenders expected to resume taking applications on Monday.

What’s in the New Bill

The new legislation primarily replenishes funding for two hugely popular – and quickly depleted – aid initiatives authorized or enhanced by the CARES Act: the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program. The new bill also seeks to correct for the way that big banks had crowded out small lenders, hauling in the lion’s share of funding for their clients. Additionally, Stimulus 3.5 provides much needed financial assistance to hospitals and testing.

With the PPP and EIDL programs on hold, as well as millions of small business owners, Congress didn’t take the time with this new bill to fix the many holes that have emerged since the passing of the CARES Act. It’s expected that they will next round. Additionally, lobbyists for banks and small businesses are pushing for more flexibility with when and how PPP loans can be used.

Here are the new stimulus bill details:

More Funding for the Paycheck Protection Program

Originally allocated $349 billion, the PPP ran out of money last Thursday. When the new bill is enacted, the Small Business Administration (SBA) program will receive an additional $310 billion. Of that $310 billion, $30 billion will be set aside for lending by insured depository institutions and state and federal credit unions, all with $10 billion to $50 billion in consolidated assets. Another $30 billion will be set aside for lending by community financial institutions (e.g., minority depository institutions and SBA-certified development companies), insured depository institutions with consolidated assets of less than $10 billion and credit unions with consolidated assets of less than $10 billion.

Additionally, the new bill appropriates an extra $2.1 billion for SBA salaries and expenses.

More Funding for Economic Injury Disaster Loans 

A farmer in a green field can now apply for small business stimulus relief.

This SBA program existed before the coronavirus crisis, but the CARES Act authorized the program to provide forgivable $10,000 advances meant to cover payroll. The funding for these EIDL grants – $10 billion – quickly ran out. So the new bill provides an additional $10 billion for them, plus $50 billion more for loans.

Also, the new legislation expands eligibility to farmers and ranchers, specifically agricultural enterprises with 500 or fewer employees.

The Public Health and Social Services Emergency Fund

The new bill allocates $75 billion to the Public Health and Social Services Emergency Fund for hospitals and other health care providers. The fund is to help them (i.e., public entities; Medicare- and Medicaid-enrolled suppliers and providers; and certain for-profit and not-for-profit entities) prevent, prepare for and treat coronavirus. The bill allocates another $25 billion as startup funds for a national COVID-19 testing program. Of the $25 billion, $11 billion is to go to States, localities, territories, tribes and tribal organizations and health providers for testing, contact tracing and more.

Finally, in recognition of the fact that the economy can’t recover before the coronavirus is contained, the bill requires that the White House create a national strategic plan to increase testing capacity. It was actually this last provision that was one of the last sticking points during negotiations. The administration has 30 days after the enactment of the bill to issue its plan.

The Bottom Line

A woman counting her cash represents the need for more small business stimulus relief - beyond this new bill.

The latest coronavirus bill flows desperately needed cash to small businesses: $310 billion through the Paycheck Protection Program (PPP) and $60 billion to the Economic Injury Diasaster Loan (EIDL) program. It also appropriates $100 billion for hospitals, health care providers and testing. With this round of funding, Congress sought to fix at least one problem by setting aside $60 billion of PPP funding for community-based and small lenders who serve rural, minority-owned and women-owned small businesses.

This bill is considered an interim bill – hence its nickname, Stimulus 3.5. Another, much larger stimulus package is likely needed to ease the financial strain that many Americans are experiencing as a result of the coronavirus pandemic.

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