Article by: Jeffrey Skolnick, CPA, M.S. Taxation

On Tuesday April 21, 2020, the Senate passed a $484 billion package to assist small businesses and hospitals as well as to expand testing for COVID-19. The bill was passed by unanimous consent in the Senate and is expected to be voted on and passed by the House on Thursday.

The Act is officially known as the “Paycheck Protection Program and Health Care Enhancement Act”.

SMALL BUSINESS PROGRAMS

Section 101 – Amendments to the Paycheck Protection Program, Economic Injury Disaster Loans, and Emergency Grants

When the Paycheck Protection Program (PPP) was originally signed into law on March 27, 2020, the authorized and appropriated amount dedicated to this program was $349 billion. This Act increases this number by $310 billion, bringing the total amount authorized for the PPP to $659 billion. The Act also appropriates an additional $11.335 billion for this program for a total of $670.335 billion.

EIDL grants under the original CARES Act were expanded. The original Act appropriated $10 billion for these grants. The new Act adds another $10 billion, bringing the total to $20 billion. The definition of businesses that are eligible for EIDLs is the same as entities eligible for the Paycheck protection program. These loans are intended to provide small businesses with funds to cover costs in response to the coronavirus crisis. Borrowers request up to a $10,000 emergency advance, which is paid within 3 days after the application is submitted. These funds can be used for paid sick leave for employees unable to work due to the direct effect of the coronavirus, payroll costs during business disruptions or substantial slowdowns, increased material costs incurred because materials are unavailable from the applicant’s original source due to interrupted supply chains, rent or mortgage payments and repaying obligations that can’t be met due to revenue losses. I just want to state that based on what I’ve seen with my clients, the money has not been paid within 3 days, and it is limited to $1,000 per employee up to a maximum amount of $10,000.

The Act also specifies that of the additional money appropriated for the PPP:

• $30 billion is for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 and $50 billion

• $30 billion is for loans made by Insured Depository Institutions and Credit Unions that have assets less than $10 billion

ADDITIONAL EMERGENCY APPROPRIATIONS FOR CORONAVIRUS RESPONSE

Appropriates $75 billion to eligible health care providers for health care related expenses or lost revenues attributable to coronavirus. These funds may be used for a wide variety of expenditures. Th act specifically states the building or construction of temporary structures, leasing of properties, medical supplies and equipment including personal protective equipment and testing supplies, increased workforce and trainings, emergency operation centers, retrofitting facilities, and surge capacity.

$25 billion has also been appropriated for expenses to research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests. The Act states this is both for active infection and prior exposure.

$2.1 billion has been appropriated and is to remain available until September 30, 2021 for Salaries and Expenses.

The Act appropriates $50 billion for the Disaster Loans Program Account. These funds are available until expended.

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