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On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was signed into law (the “Act”).
Among its key provisions is the infusion of an additional$310 billion in funding to the Small Business Administration (SBA) to finance the Paycheck Protection Program (PPP) loans under the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act). The PPP loan allows employers with 500 or less employees to obtain loans of 2.5 times the employer’s payroll up to $10 million to bridge their payroll and other expenses during the pandemic. The full amount of the loan can be forgiven provided that the borrower complies with certain requirements during an eight week period from the date of the loan, including using at least 75% of the loan on payroll and maintaining employee counts.
Of this $310 billion, $60 billion is set aside for smaller lending facilities, including community development financial institutions, minority depository institutions and credit unions.
The PPP, which was originally authorized for $349 billion under the CARES Act, was implemented on a first-come first serve. The PPP was wildly popular, exhausting the original amount within two weeks of the PPP launch. Those employers who were able to secure the PPP loan will not be eligible for another PPP loan under the Act.
Another key provision is the infusion of another $10 billion in funding for the Emergency Injury Disaster Loan (EIDL) grants. The EIDL grant provides up to $10,000 per employer. While an employer can get both the EIDL and PPP loan, the amount of the EIDL is reduced from the amount of the PPP loan.
The Act provides $75 billion for hospitals and eligible health care providers. The Act provides for another $25 billion for research and development, manufacture, administration and implementation of COVID-19 testing.
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