Additional Relief Legislation Is Here: What You Can Do Now

A new relief package has passed. This package aims to provide additional funds to many small businesses and organizations affected by the COVID-19 pandemic. 

What do you do now? Meet with your business advisor and banker to ensure you have proper documentation in order. With the re-opening of the PPP program on April 27, the additional funding granted under the Paycheck Protection Program is expected to go quickly. Preparation is key.

What Is Included in the New Relief Legislation?
There are four key components of the new legislation.

Paycheck Protection Program
This is a crucial element of the new relief legislation. Many small businesses and organizations are still scrambling for funding as the previous Paycheck Protection Program (PPP) amount ran out. There will now be $310 billion in additional funding for the PPP program. Sixty billion of this will be allocated to smaller community banks in an effort to service underserved areas.

As a reminder, the PPP exists to ensure workforce retention in the wake of COVID-19. Specifically, there are certain elements that must be met in order to ensure maximum loan forgiveness.

The new relief legislation allocates additional funding for the already established Paycheck Protection Program. Loan amounts will adhere to the same rules previously set in place by the CARES Act.

Applicants that applied for the Paycheck Protection Program after the initial funding ran out should contact their bank on next steps. Some banks have held your spot in line for this additional funding. Others are choosing to make you re-submit your application and begin the process anew. Check with your banker as soon as possible to see what your best next steps are.

Economic Injury Disaster Loan Program
The new relief legislation also adds $60 billion in funding to the SBA’s Economic Injury Disaster Loan (EIDL) Program, including $10 billion allocated to the EIDL grants for emergency funds. These loans are facilitated through the SBA and aim to provide working capital for small businesses, agricultural cooperatives, ESOPs and nonprofits in need of financial help due to a disaster.

While a borrower may be eligible for both a EIDL and PPP loan, a borrower must use the proceeds from each loan on differing expenses.

Additional Funding for Healthcare Providers, Hospitals and Testing
Hospitals and health systems are facing a unique set of circumstances when it comes to COVID-19. Specifically, they are facing lost revenue due to the cancellation of elective procedures, while simultaneously dealing with the impact of providing front-line care to COVID-19 patients.

The CARES Act originally provided aid in the form of a provider relief fund. This additional legislation aims to expand on that. As part of the roughly $484 billion of funding in the act, $75 billion was appropriated to the Public Health and Social Services Emergency Fund to support eligible healthcare providers for healthcare related expenses or lost revenues that are attributable to the coronavirus through grants or other mechanisms as determined by HHS. Additionally, $25 billion was appropriated to this fund to assist with COVID-19 testing.

What Can You Do Now?
This round of funding is expected to go quickly. The best course of action is preparation. Talk to your accountant and banker and ensure you have the proper documentation and necessary information ready for your application.

And don’t forget, receiving the funding is just the first step. Knowing how to properly maximize your loan forgiveness can make a significant impact for your organization long term.