Congress Funds $310B for Paycheck Protection Program, $60B for Economic Injury Disaster Loans

April 23, 2020

The U.S. House of Representatives passed the Paycheck Protection Program and Health Care Enhancement Act (PPP Enhancement Act) by 388 to 5 on April 23, 2020. This followed the U.S. Senate’s passage of the bill on April 21, 2020. President Donald Trump is expected to sign the bill into law shortly.

The bill, which some call “Phase 3.5” of Congress’s 2019 novel coronavirus (COVID-19) pandemic response, is a $484 billion relief package that amends certain portions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). A key component of the bill will be to add another $310 billion in appropriations to the Paycheck Protection Program (PPP), including $60 billion of set-asides for issuance of PPP loans by community development lenders, credit unions and certain other smaller lenders. The amendment also provides additional funding for economic injury disaster loans (EIDL) under Section 7(b)(2) of the Small Business Act and for the $10,000 emergency grants available in connection with that program.

While a key element of the bill is increasing funding for healthcare-related expenses and lost revenue and COVID-19 testing, those matters are not addressed here but are covered in a separate McGuireWoods alert. The amendments to the PPP and EIDL program are described in more detail below.

New Funding. Upon enactment, the PPP Enhancement Act will provide an additional $310 billion for PPP loans, $60 billion of which is earmarked for distribution by (a) depository institutions and credit unions with assets less than $50 billion and (b) community financial institutions. The PPP Enhancement Act will also provide another $50 billion for EIDL, an additional $10 billion for emergency grants and $2.1 billion for SBA salaries and expenses.

Set Aside. The PPP Enhancement Act will require the SBA to set aside $60 billion of the newly authorized $310 billion of PPP funds for PPP loans issued by (a) community development financial institutions (as defined in section 103 of the Riegle Community Development and Regulatory Improvement Act of 1994); (b) minority depository institutions, as defined in section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989; (c) development companies that are certified under title V of the Small Business Investment Act of 1958; (d) an intermediary under the SBA’s Microloan Program, as defined in Section 7(m)(11) of the Small Business Act; (e) state and federal credit unions with less than $50 billion of assets; and (f) depository institutions with less than $50 billion in assets. The $60 billion set-aside is further subdivided so that $30 billion would be earmarked for PPP loans made by insured depository institutions and credit unions with at least $10 billion and less than $50 billion in assets, while the other $30 billion would be earmarked for PPP loans by depository institutions and credit unions with assets of less than $10 billion and by the community financial institutions described in clauses (a) through (d).

EIDL Eligibility Expansion. Under the PPP Enhancement Act, agricultural enterprises — defined in Section 18(a) of the Small Business Act as “small business concerns engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural-related industries” — with 500 or fewer employees will be eligible for EIDL and emergency grants.

Please contact the authors for additional information on the bill and its various healthcare provisions. McGuireWoods has published additional thought leadership on how companies across various industries can address crucial coronavirus-related business and legal issues. The firm’s COVID-19 response team stands ready to help clients navigate urgent and evolving legal and business issues arising from the COVID-19 pandemic.