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04-27-20 | Economic News

A Breakdown of PPP Enhancement Act

New Assistance for Small Businesses

The new act provides an additional $321 billion to the PPP and numerous other enhancements to small businesses.

On April 24, the Paycheck Protection Program and Health Care Enhancement Act (H. R. 266) was finalized to provide $484 billion of aid for small businesses and healthcare providers. This includes $370 billion in additional assistance for small businesses under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, including emergency grants.

The initial funds appropriated by the original PPP in forgivable (if the borrower maintains employment and compensation levels) loans to qualifying small businesses affected by COVID-19, to cover payroll, rent, utilities and other costs were exhausted on April 16. Now additional help is available with the passing of the Enhancement Act.

According to Andrew Finkle, partner, Tax and Business Services at Marcum Accountants and Advisors, the Enhancement Act provides an additional $321 billion to the PPP, with other enhancements as follows:

• $310 billion for PPP loans, including $60 billion to smaller community lenders to ensure that more PPP loans are issued to small businesses, many of which were shut out during the first round of funding; plus

- $30 billion is set aside for banks and credit unions, including minority depository institutions (MDIs), which have between $10 billion and $50 billion in assets and are PPP lenders.

- $30 billion is set aside for banks and credit unions with less than $10 billion in assets, as well as all MDIs, Community Development Financial Institutions (CDFIs), certified development companies (CDCs) and microlenders that are PPP lenders.

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• $11.3 billion for administrative fees.

Additionally, $62.1 billion is appropriated for the Small Business Administration, as follows:

• $50 billion in loan subsidies to fund the SBA Economic Injury Disaster Loans (EIDLs);

• $10 billion for EIDL grants; and

• $2.1 billion to administer the PPP and other SBA programs funded in the bill.

The Enhancement Act also provides financial support to hospitals, healthcare providers and COVID-19 testing.

PPP REQUIREMENTS UNCHANGED
Other than the additional funds, the Enhancement Act does not change the PPP's original framework or requirements. The SBA is still requiring that borrowers use at least 75% of loan proceeds for payroll costs. To qualify for forgiveness, a borrower must spend the loan funds within an eight-week period measured from the date of the loan disbursement.

OTHER NEW FUNDING
The Enhancement Act also earmarks an additional $60 billion for the Economic Injury Disaster Loan (EIDL) and emergency grant program run through the SBA's Office of Disaster Assistance. The original allocation of $10 billion towards this goal was quickly exhausted.

Agricultural enterprises with no more than 500 employees are now eligible for EIDL loans and grants

Marcum Accountants and Advisors provides the following insight: "The additional funds authorized by the Enhancement Act will allow lenders to fund loans for businesses with approved or pending PPP applications, continue underwriting applications, and resume accepting new applications.

"If you have already applied for a PPP loan, you should not submit a second application. Businesses seeking to access the new funds should act promptly, as demand for the loans continues to be high. To apply, you must submit SBA Form 2483 (Paycheck Protection Program Application Form) and payroll documentation.

"It is expected that the SBA will issue additional guidance via "FAQs" in the coming days and weeks, and we will continue to advise you as we obtain more information. Those industries particularly hard hit, such as the restaurant and retail sectors, have voiced concerns related to the PPP and its required mandates which might result in missing out on forgiveness if their businesses are closed. It is expected that the SBA and/or Treasury may issue guidance to address these specific concerns.

"Have more questions about the impact of the coronavirus on your business? Visit Marcum's Coronavirus Resource Center for up-to-date information."

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