Round 2: Paycheck Protection Program and Health Care Enhancement Act

The popularity of the Paycheck Protection Program (PPP) among the nation’s small businesses, which was enacted as part of the CARES Act (see our previous Client Alert), resulted in the entire $349 billion dollars allocated to the PPP relief to be fully committed within 14 days.  This left many small businesses frustrated and unable to benefit from the program.

For those small businesses that did not receive any PPP loan proceeds either due to late submissions or issues with their banks, they may be granted another bite at the apple with legislation passed today to increase the funding of the program by an additional $310 billion. This Act (the Paycheck Protection Program and Health Care Enhancement Act), will provide the following additional benefits to the country’s small businesses:

  • $310 billion for PPP loans, with $60 billion specifically allocated for loans made by small lenders and community-based institutions;
  • Another $50 billion for the SBA’s Economic Injury Disaster Loan program (EIDL); and
  • An additional $10 billion for the SBA’s Emergency Economic Injury Grant program (up to $10,000 forgivable grant for each applicant).

Due to the demand for the funds as exhibited in the first round of PPP funding, we strongly recommend clients who  meet the eligibility requirements, but that have yet to apply for such loan, to contact their bank (or your DUGGAN BERTSCH representative if you need a bank referral) immediately to initiate the required application and paperwork.

For those banks that have already administered and made loans under the PPP, the process and timing should improve this time around which could suggest the funds will be processed more quickly (and also run out faster). The special allocation of funding for small community banks and credit unions ($60 billion) noted above, along with the experience some clients have encountered with delayed applications made through large banks, may warrant consideration for small businesses hoping to be part of this second tranche of funding.  

This is a first-come first-serve program so timing of your application submission to the SBA may be the difference between receiving funding or not. Initial indications from Secretary Mnuchin are that this round of PPP funding may be the last to address the COVID-19 crisis so small businesses that are eligible should take advantage of this opportunity to potentially subsidize up to 8 weeks of payroll and other qualified expenses.

Members of the DUGGAN BERTSCH team are available to assist small business employers in seeking PPP loans, including advice regarding specific provisions of the law as it relates to their business as well as introductions to other banking relationships where necessary. Please contact your DUGGAN BERTSCH representative for more information or assistance.

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