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The Vault
April 22, 2020
Additional Funding for SBA Programs Under CARES Act
On April 21, 2020, the Senate approved a $484 billion COVID-19 relief package to supplement the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) – the Paycheck Protection Program and Health Care Enhancement Act (the Act). The Act is intended to provide further relief for small businesses, hospitals and virus testing. The House is expected to approve the Act as early as Thursday, April 23, 2020. Below is a summary of the provisions in the Act affecting the small business lending programs.
Amendments to Paycheck Protection Program (PPP)
The Act would make an additional $310 billion available under the PPP, increasing the total authorization from $349 billion to $659 billion, after the initial amount was exhausted in less than two weeks after loans became available under the PPP. The PPP initially authorized up to $349 billion in forgivable loans to small businesses to pay specific expenses, including payroll costs, during the COVID-19 pandemic. For a summary of the first round of the PPP, click here.
The Act also reserves $30 billion under the PPP for lending by Insured Depository Institutions and Credit Unions with consolidated assets between $10 billion and $50 billion; and reserves $30 billion for lending by Insured Depository Institutions and Credit Unions with less than $10 billion in consolidated assets and Community Financial Institutions.*
*Includes 1) minority depository institutions as defined in Section 308 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 2) community development financial institutions as defined in Section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994, 3) intermediaries as defined under Section 7(m)(11) of the Small Business Act, and 4) development companies certified under Title V of the Small Business Investment Act of 1958.
Amendments to Emergency Economic Injury Disaster (EIDL) Grants and Loans
The Act makes the following revisions to EIDL grants and loans:
- Increases the funds available under the EIDL by $10 billion increasing the total authorization from $10 billion to $20 billion;
- Allows agricultural enterprises, as defined in section 18(b) of the Small Business Act, with not more than 500 employees to receive EIDL grants and loans; and
- Provides $50 billion for additional SBA guarantees under its broader disaster loan program.
For more information, please feel free to contact:
Jon Talcott at (202) 689-2806 or (202) 460-2197 (jon.talcott@nelsonmullins.com);
Peter Strand at (202) 689-2983 (peter.strand@nelsonmullins.com);
Mike Bradshaw at (202) 689-2808 (mike.bradshaw@nelsonmullins.com);
Nick Garifo at (202) 689-2925 (nick.garifo@nelsonmullins.com); or
Kaylen Loflin at (202) 689-2785 (kaylen.loflin@nelsonmullins.com
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These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.
