Deal Reached to Replenish Paycheck Protection Program

Deal Reached to Replenish Paycheck Protection Program

On Tuesday, April 21, 2020, the United States Senate passed H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act, on a voice vote. This measure is the fourth installment of federal financial assistance related to the COVID-19 pandemic. It includes $321 billion in additional funding for the Paycheck Protection Program and $60 billion in new funding for the depleted Economic Injury Disaster loans program.  Another $100 billion in new funding will go to healthcare providers and to ensure more COVID-19 testing. This measure is expected to be taken up by the House of Representatives on April 23, 2020, and then quickly signed by President Trump.

As currently drafted, the new bill directs $321 billion to the Paycheck Protection Program (PPP) to replenish funds in the existing loan program. The CARES Act passed on March 27, 2020, created the PPP to help businesses with 500 or fewer employees keep their workers on the payroll and fund their healthcare benefits. The intention was to accept loan applications through June 30, 2020, but the program’s initial $349 billion of funding ran out on April 16, 2020. The Senate-passed legislation does not create any new requirements for PPP applications, nor does it change any existing eligibility criteria at this time. The only significant change in H.R. 622 related to PPP is a requirement that $60 billion of the new loan funds flow through smaller and community-based financial institutions.

Beyond the PPP provisions, the new bill creates other sources of funding for businesses and healthcare providers and will expand resources related to COVID-19 tests. A different loan and grant program designed to provide quick cash infusions to small and mid-sized companies called the Economic Injury Disaster Loan program, also ran out of CARES Act money quickly. So, H.R. 622 would provide $60 billion in new funding. The bill also directly appropriates $100 billion to the Public Health and Social Services Emergency Fund administered by the federal Department of Health and Human Services. The draft bill directs that $75 billion of this money must flow to healthcare providers and hospitals and that $25 billion must finance COVID-19 testing. One billion of these funds must provide testing coverage for the uninsured, and $11 billion of the testing money must flow to states and local governments. One of the specified ways state and local governments may use these testing funds is to assist employers with testing at worksites.

As the House of Representatives considers this legislation, provisions may change. Kistler Tiffany Benefits is carefully monitoring the status of the Paycheck Protection Program and Health Care Enhancement Act.  As soon as there is final action on the measure, we will provide our clients with the pertinent details.