The U.S. House of Representatives passed the “Paycheck Protection Program and Health Care Enhancement Act” (“Act”) that was approved by the Senate on April 21. President Trump is expected to sign the legislation into law. The Act provides additional resources for Small Business Administration (“SBA”) loan programs that reached the authorized funding limitations provided in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. For more information regarding the CARES Act and SBA loan programs, please see the Whitley Penn COVID-19 page at “https://www.whitleypenn.com/covid-19-update/”.
The Act authorizes an additional $310 billion for the SBA Paycheck Protection Program (“PPP”). $60 billion of the total funds are earmarked for underserved borrowers such as minority and rural businesses. Under the PPP, employers with 500 or less employees are eligible to borrow up to $10 million and the proceeds may be forgiven if used for specific purposes, including at least 75% for payroll costs.
The Act also authorizes an additional $60 billion for the SBA Economic Injury Disaster Loan (“EIDL”) program. Qualifying small businesses may borrow up to $2 million under this program subject to favorable interest rates and repayment terms. $10 billion of the available funding is designated for the EIDL advance program which provides a $10,000 grant to businesses impacted by the COVID-19 pandemic.
Qualified employers (including non-profit organizations), sole proprietors, and self-employed taxpayers that applied for, but were unable to secure a loan under the original PPP, should act immediately to continue the application process. Those borrowers should contact the bank that was processing their original application to clarify the steps needed to resubmit their loan request. Borrowers that have not applied for the PPP loan should do so as soon as possible. Note that borrowers can only apply for one PPP loan.
Whitley Penn has a task force of professionals available and ready to help you evaluate the various options and choose the financing program that is best for your company. Whitley Penn can also assist you in determining the amount of financing for which you qualify and help you to submit the required documents and complete the application process. Please contact us if you have any questions or require additional assistance.
Whitley Penn is continually monitoring the tax and economic developments related to the coronavirus pandemic and will send out additional alerts in the future. In the interim, please call your Whitley Penn tax advisor if you have any questions or require any additional information.