April 23, 2020 |
An internal working group made up of Troutman Sanders Strategies, Troutman Sanders, and Pepper Hamilton attorneys have been working closely together on SBA lending matters and will be providing further analysis as guidance and actions continue.
On Thursday, the House of Representatives passed the Paycheck Protection Program and Health Care Enhancement Act (H.R. 266), by a vote of 388 – 5, to provide supplemental funding for federal coronavirus (COVID-19) response programs and activities, sending the bill to the President for his signature. The Senate passed the bill on Tuesday.
The new supplemental package, which has come to be known as “Phase 3.5” of COVID-19 response legislation passed by Congress, totals $484 billion and primarily provides additional funding for lending programs with the Small Business Administration (SBA) and for public health activities for agencies within the Department of Health and Human Services (HHS). The provisions included in H.R. 266 are outlined below. The text of the bill can be found here.
The passage of H.R. 266 brings the total amount of COVID-19 response funding passed by Congress since the beginning of March to more than $2.5 trillion. There is widespread agreement among members of Congress and at the White House that an additional economic rescue package (or Phase 4) will be needed. Please see the Troutman Sanders Strategies summary (updated as of April 8) of what to expect in Phase 4 negotiations here.
Updated Guidance: The Department of the Treasury published updated guidance on Thursday that addresses the issue of Paycheck Protection Program (PPP) loans from going to large, publicly traded companies. The SBA updated the guidance after a public outcry over several large companies that received forgivable loans. The updated guidance allows companies to return loans in full by May 7. The guidance can be found here.
Small Business Administration
Paycheck Protection Program (PPP) – $310 billion in additional lending for the PPP (the CARES Act originally appropriated $349 billion). The application process for the original PPP opened on April 3 and funding was depleted within two weeks. Included in the new funding is a $60 billion set-aside for Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), community banks, credit unions, certified development companies, and microlenders. The set-aside provides $30 billion each for loans for institutions with assets between $10 billion and $50 billion and for loans for institutions with assets less than $10 billion.
* During the supplemental funding negotiations, the $60 billion set-aside for CDFIs, MDIs, and other smaller lending institutions was a significant demand for Democrats who felt that neighborhood small businesses, minority-owned businesses, and women-owned businesses were not receiving enough access to PPP loans from larger lending institutions.
Emergency Economic Injury Disaster Loan (EIDL) Grants – $10 billion in additional funding for EIDLs (the CARES Act originally appropriated $10 billion). The bill expands the EIDL program to allow agricultural enterprises with 500 employees or less to receive EIDL grants and loans.
Disaster Loans Program Account – $50 billion for the SBA’s broader Disaster Loans Program to be available until expended.
Department of Health and Human Services
- $75 billion in additional funding for reimbursements to hospitals and health care providers for COVID-19-related expenses and lost revenue (the CARES Act originally appropriated $100 billion).
- $25 billion for research, development, and manufacture of COVID-19 tests. This funding includes:
- $11 billion for states and localities to purchase, administer, analyze, scale-up laboratory capacity, and support employer testing.
- $1 billion for the Centers for Disease Control and Prevention for surveillance, epidemiology, laboratory capacity expansion, and public health data surveillance and analytics infrastructure modernization.
- $1.8 billion for the National Institutes of Health to develop and implement testing technologies, to accelerate research and testing, and for partnerships with governmental and non-governmental entities for research.
- $1 billion for the Biomedical Advance Research and Development Authority for advanced research, development, manufacturing, production, and purchase of diagnostic or serologic COVID-19 testing or related supplies.
- $22 million for the Food and Drug Administration to support diagnostic, serological, antigen, and other testing activities.
- $825 million for community health centers and rural health clinics.
- Requires plans from states, localities, territories, and tribes on how resources will be used for testing, increasing testing capacity, and easing COVID-19 community mitigation policies.