The $484 billion Coronavirus “Phase 3.5” relief bill has been signed by the President. This latest relief package will provide additional Covid-19 relief for small businesses, hospitals and expanded virus testing. Also attached to the relief package, is additional funding for the Paycheck Protection Program. The previous paycheck Protection Program ran out of money after the March 27the passage of the CARES Act.
Key highpoints of the bill are below:
Additional Funding for the Paycheck Protection Program (PPP)
$310 billion has been approved for the Paycheck Protection Program. In an effort to provide money to minority and rural businesses this program includes $60 billion committed to underserved communities, community banks and credit unions.
The PPP was originally authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and was funded with $349 billion. It provides up to eight weeks of cash-flow assistance to individuals eligible to continue payroll during the COVID-19 crisis and cover certain other expenses. Those recipients could qualify for loans up to $10 million calculated based on average monthly payroll costs x 2.5 and the first loan payment is deferred for six months. The loans could be forgiven if the company maintains its employee and salary levels, and if the proceeds are used to cover payroll costs and defined expenses including rent and utility costs. No more than 25% of the loan may be used for non-payroll expenses. Ordinarily a reduction or cancellation of indebtedness generally results in cancellation of debt (COD) income to the debtor, however under the CARES act amounts forgiven under a PPP loan are excluded from the recipient’s federal gross income. Unforgiven amounts of the loans will have an interest rate of 1%, a maturity of two years, and no borrower or lender fees.
Additional Funding for the Economic Injury Disaster Loan program (EIDL)
EIDL, which is run by the Small Business Administration (SBA) will get an additional $60 billion, with $10 billion of the funds reserved for the EIDL Advance program. This program provides up to $10,000 of emergency grants and does not need to be repaid.
The SBA’s EIDL program, provides up to $2 million of financial assistance to those small businesses eligible or private, non-profit organizations that suffer great economic injury as a direct result of the acknowledged disaster. The EIDL is a low-interest working capital loan at a fixed rate of 3.75% for businesses and 2.75% for nonprofits, with a term of up to 30 years. The repayment term will be determined by the applicants’ ability to repay the loan. Payments are deferred for one year, and borrowers don’t have to prove they cannot get credit elsewhere. Applicants do not go through a bank to apply, and instead, apply directly to the SBA. Loan amounts are based on the amount of economic injury and loans under $25,000 can be unsecured.
Additional Health care provider relief
Additional funding of $75 billion has been approved for the Public Health and Social Services Emergency Fund. These monies are to be distributed to hospitals and health care providers for related expenses or lost revenue attributable to the Coronavirus.
Funding for COVID-19 testing
The bill includes an additional $25 billion for expenses to research, develop, validate, manufacture, purchase, administer and expand COVID-19 test. These monies will be allocated to the Public Health and Social Services Emergency Fund.
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