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Congress Approves $484 Billion More in Stimulus Funds, Including $320 Billion for Small Businesses

As small businesses continue to adjust and move forward amid the global interruption caused by the COVID-19 pandemic, more assistance now appears to be on the way.

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As small businesses continue to adjust and move forward amid the global interruption caused by the COVID-19 pandemic, more assistance now appears to be on the way.

As small businesses continue to adjust and move forward amid the global interruption caused by the COVID-19 pandemic, more assistance now appears to be on the way with the newest extension of the Paycheck Protection Program (PPP), a core piece of the multi-trillion dollar CARES Act that has been providing financial assistance for businesses throughout this crisis.

The U.S. Senate on Wednesday and the House on Thursday approved $320 billion in additional funds for the PPP as part of the overall $484 billion added to the CARES Act, and the package has now gone to President Trump for his signature. These funds, on top of the initial $349 billion for the PPP that was signed into law by the President in late March, provide a direct incentive for small businesses (companies with fewer than 500 employees) to keep their workers on the payroll by providing each small business a loan up to $10 million for payroll and certain other expenses.

Under the PPP, if employees are kept on the payroll for eight weeks, the U.S. Small Business Administration (SBA, which administers the program) will forgive the portion of the loans used for payroll, rent, mortgage interest and utilities. Up to 100 percent of the loan is forgivable, and business owners can apply through their lender.

The first round of PPP, naturally, proved to be highly popular among small businesses, so much so that Congress has acted to expand it to allow them to remain vital until this crisis subsides. Small businesses are correctly using PPP funds to provide themselves and their employees a bridge between now and the conclusion of the COVID-19 crisis, a means to keep their doors open and continue to serve their clientele. Given the effectiveness of the first round of PPP funds, this second round seems more than justified and will provide the support to those small businesses who truly need it.

It is also important to note that a percentage of the new PPP funds—a minimum of $60 billion, according to published reports—has been set aside for smaller community lenders who serve areas with fewer available lending institutions. This will allow them to reach businesses in need which perhaps did not have access to the initial PPP funds, and could provide even more support to small companies that need it during this time.

Additional sectors of our economy will receive additional support from this $484 billion extension of the CARES Act as well. An additional $75 billion has been allocated to hospitals and health care providers to help in their efforts to provide the critical care needed by patients during this time, while an additional $25 billion has been allocated to boost testing for COVID-19, a key step that at some point will be an important factor in allowing individual states to reopen for business and getting the economy moving again.

This new round of funding is now expected to be signed into law by the President. Despite the extraordinary and unprecedented amount of disruption this pandemic has caused, there has been decisive and near unanimous action out of Washington D.C. to help businesses stay on track, and to provide everyone with a better chance for eventual recovery.

 

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Disclaimer:  The contents of this resource are for general informational purposes only. While every effort has been made to ensure its accuracy, the information is provided “as is” and no representations are made that the content is error-free. We have no obligation to update any content, comments or other information for retroactive or prospective interpretations or guidance provided by regulators, financial institutions or others. The information is not intended to constitute legal advice or replace the advice of a qualified professional. There are areas of the CARES Act where additional clarification from the Treasury Department and the SBA is needed. Your judgment and interpretation of the act may be needed. Users should consult with their legal counsel and representatives of the lending institution regarding the proper completion of their application and supporting documentation.

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