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Paycheck Protection Program and Health Care Enhancement Act

President Trump signed the Paycheck Protection Program and Health Care Enhancement Act, which was first passed by the U.S. Senate on April 21, 2020, and the U.S. House of Representatives on April 23, 2020. In addition to making certain other emergency appropriations, this Act adds $321.335 billion to the Paycheck Protection Program (PPP) loan fund, including set-asides for small- and medium-sized financial institutions that serve the needs of “unbanked” and underserved small businesses and non-profit organizations – especially rural, minority and women-owned businesses. In addition, the Economic Injury Disaster Loan (EIDL) fund received an additional $50 billion plus $10 billion for the Economic Injury Grant program (up to $10,000 per applicant). You are encouraged to act quickly if you wish to participate in these programs.

Paycheck Protection Program

If you have not yet applied for a PPP loan and intend to do so, you are strongly recommended to contact a financial institution with whom you have established a lending (preferred) or deposit relationship immediately. Funds are anticipated to go quickly and we have not been advised if additional funding will be made available. If you do not have an established banking relationship, or would like to find a different approved lender, you may want to consider a small- or medium-sized lending institution/community bank, as the additional appropriations set aside $60 billion for these lenders. For a link to the application and a list of documentation you will likely need to apply, please read this article. Please refer to this article to determine if you are eligible for a PPP loan.

If you recently applied for a PPP loan, but did not receive a loan number from the SBA, or confirmation of submission of your application by your lender, you should contact your lender to determine if your application remains in their queue and is ready for submission to the SBA once funds become available. Duplicate applications may result in rejection by the SBA so it is imperative you determine the status of your previously submitted application. You may not apply for more than one PPP loan.

Economic Injury Disaster Loan

EIDLs are available to small businesses with fewer than 500 employees (certain industries permit more than 500 employees), sole proprietors, independent contractors and self-employed persons, private non-profit organizations or 501(c)(19) veterans organizations affected by COVID-19. The Act opens the EIDL program to agricultural enterprises (engaged in the production of food and fiber, ranching and raising of livestock, aquaculture, and all other farming and agricultural related industries). EIDLs may be for an amount of up to $2 million, incur interest at the rate of 3.75% (2.75% for nonprofits), and are repaid over a term of up to 30 years. Depending on the loan amount, collateral and personal guarantees may be required. You may participate in both the EIDL and the PPP loan program, but you may not use EIDL and PPP funds for the same purpose. EIDL funds may be used for fixed debts, payroll, accounts payable and other bills that cannot be paid because of COVID-19. Once supplemental funds have been appropriated, you may apply at www.sba.gov.

Economic Injury Grant Program

Applicants must meet the requirements to participate in the EIDL, and may apply for an advance of up to $10,000. Recently, the SBA has limited allocations to $1,000 per employee up to $10,000. These funds are to be made available shortly after successful application and are not intended to be repaid. Once supplemental funds have been appropriated, you may apply at  www.sba.gov.
Please contact Chad Walker or your Bose McKinney & Evans attorney for assistance with the Paycheck Protection Program.