Congress Restarts Stimulus Loan Program

April 22, 2020

The Senate passed the “Paycheck Protection Program and Health Care Enhancement Act” (the “Bill”) on Tuesday, April 21 and the House is expected to pass the Bill on Thursday, April 23.  The President has said that he will sign the Bill.  The official text of the Bill is not available and may change.

What the Bill does:

Gives the SBA $310B to make more Paycheck Protection Program (“PPP”) loans.  No substantive changes were made to the PPP loan program, other than allowing agricultural enterprises to apply.  Therefore, all of the existing issues with the PPP loan program, such as the “size” of the employer and how self-employed persons can apply remain unresolved.

Gives the SBA $50B to make COVID-19 Economic Injury Disaster Loans (“EIDL”).

Gives the SBA $10B to make a maximum of $10,000 per applicant tax-free grants under the Economic Injury Disaster Loan program.  No changes were made to the EIDL grant program.

Provides more money for COVID-19 testing and care.

Our Advice:

If you applied for a SBA EIDL loan or PPP loan and were turned down because the SBA ran out of money, you should contact your lender to determine if you are still in the queue for approval when Congress gives more money to the SBA.

If you are not in the queue, you should apply with your lender as soon as possible because this money is likely to run out soon.

Based on the first round of PPP loan approvals, borrowers are likely to be more successful if they apply at a lender where they keep their checking account and from whom they have borrowed money in the past.

For questions regarding this subject, please contact S. John Kelly at jkelly@smgglaw.com.