April 24th, 2020 - 10:53 am
Yesterday evening, the U.S. House of Representatives voted 388-5 to give final approval to an additional $370 billion for federal small business loan and grant programs. The Senate cleared the bill (H.R.266) by voice vote on Tuesday. President Trump has promised to sign the bill immediately into law.
It includes $310 billion for the Paycheck Protection Program (PPP), which offers forgivable loans designed to help small businesses keep workers on their payroll. Of this amount, $60 billion will be reserved for smaller banks that cater to underserved communities. That money will be further divided between banks with less than $10 billion in assets and those with between $10 billion and $50 billion in total assets.
The Senate approved the bill (H.R.748) late Wednesday night by a unanimous vote of 96-0. The bill was the product of intense negotiations between Senate Democrats and Republicans, Speaker of the House Nancy Pelosi, and White House officials. President Trump has promised to sign the bill once it arrives at his desk.
The bill provides $60 billion for the Small Business Administration's (SBA's) COVID-19 Economic Injury Disaster Loan (EIDL) program. This amount includes $10 billion for additional emergency small business grants of up to $10,000. These grants act as an advance on EIDLs that does not have to be paid back even if the loan application is rejected. The SBA has limited these grants to $1,000 per employee up to $10,000 per applicant. This is likely to remain unchanged with the new cash injection.
Initial funding for these new programs in the CARES Act was quickly exhausted and applications had been suspended. With this new injection of funding, the Trump administration and participating lenders say they hope to restart these programs immediately. It is unclear how long this second round of funding will last, however. Businesses seeking assistance under these programs should act now.
The bill also provides $75 billion for hospitals and other healthcare providers and $25 billion to support COVID-19 testing, laboratory capacity, and contact tracing. A portion of these funds will be used to support testing by employers. Note that the bill does not include an expansion of food stamp benefits or a $150 billion bailout for state and local governments proposed by Democrats. These proposals are not going away and are likely to resurface in future discussions.
Congressional leaders are evaluating next steps as the initial wave of coronavirus infections begins to subside. Many lawmakers view today's action as a stopgap until a more comprehensive coronavirus relief and economic recovery bill can be crafted. Some members of Congress have begun outlining their priorities for such a bill. Senate Majority Leader Mitch McConnell said this week that negotiations are unlikely to begin in earnest until the two chambers reconvene in May.
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