COVID-19 Stimulus Update
Congress reached a deal last week on a 4th COVID-19 stimulus bill and earlier this afternoon the President signed it into law. The legislation, dubbed “CARES 2,” amends and expands on the CARES Act Phase 3 stimulus that was passed at the end of March. The largest component of this $484 billion package is additional funding for small business loans created by the CARES Act. The expectation is that we could see that money comes through within just a few days given that the programs have already been set up. View the first CARES Act breakdown for home and building performance contractors here.
Below you'll find a summary of the key pieces in this legislation and another update on business-related COVID relief programs. Note, discussions continue on a potential broader stimulus package that could include infrastructure as well as clean energy provisions. However, Congress is unlikely to move forward with a Phase 5 Stimulus until they are able to return to Washington—and the timeline for that remains uncertain. We could see Congress pass additional interim packages providing infusions into existing programs, before addressing any larger stimulus package.
Paycheck Protection Program (PPP) - $321 billion
After the program ran out of money last week, the legislation provides an immediate infusion of new funding—$310 billion, plus an additional $11 billion for administrative costs. The SBA could begin approving applications again as soon as Monday, but exact timing has not yet been released.
$60 billion carveout for community-based lenders and small lenders. In an effort to ensure the PPP loans reach smaller and underserved businesses, the legislation stipulates that of the $310 billion, $60 billion must be for loans made by community financial institutions, credit unions, and banks with less than $50 billion of assets.
On April 23, the SBA and U.S. Treasury issued a new FAQ regarding PPP available here.
SBA Economic Injury Disaster Loans (EIDL) - $60 billion
- SBA stopped accepting EIDL applications after funding ran out on April 16. This legislation provides:
- $10 billion in new funding for Emergency EIDL Grants (an EIDL advance of up to $10,000 that does not have to be repaid, as established by the CARES Act).
- $50 billion for EIDLs, the low-interest disaster loans for small businesses impacted by COVID-19.
Additional Emergency Appropriations for COVID-19 Response
- $75 billion for health care providers
- $25 billion for COVID testing
Other COVID Relief Program Updates
Main Street Lending Facility – Midsize Business Loans
- The CARES Act provided $600 billion for loans for midsize businesses. The Federal Reserve and U.S. Treasury have released initial guidance for this midsize business loan program, called the “Main Street Lending Facility,” and it is expected to come online within the next few weeks.
- Businesses with up to 10,000 employees or revenues less than $2.5 billion are eligible.
- Loan details: 4-year term, one-year deferral of payments of principal and interest, adjustable interest rate of the Secured Overnight Financing Rate plus 250-400 basis points, minimum loan amount is $1 million. Note, unlike the PPP, these loans are not forgivable.
- The Federal Reserve has said businesses who receive a PPP loan may also apply for a loan through this program.