This $484 billion relief bill, officially known as the "Paycheck Protection Program and Health Care Enhancement Act" was signed into law by former President Trump on April 24, 2020.
The legislation added money to existing programs that have either run out of money or are deemed underfunded. It increased funding for the Paycheck Protection Program, Economic Injury Disaster Loan (EIDL) program, including emergency grants, and included new hospital and health care funding as well as additional testing.
How the Funds Break Down
The bill provided $370 billion in small business funding including $310 billion to the Paycheck Protection Program (PPP). Of the $310 billion, approximately $60 billion was aimed at small, medium, and community lenders with assets ranging from less than $10 billion up to $50 billion.
An additional $60 billion was added in April 2020 to the Economic Injury Disaster Loan (EIDL) program which, like PPP, was depleted. This was in addition to a $75 billion appropriation for hospitals and $25 billion for testing.
Most of the balance of about $14 billion went toward administrative costs, making the package total $484 billion.
- The new $484 billion bill served as interim funding legislation as Congress begins discussions on Phase 4 of its COVID-19 stimulus and relief programs.
- The lion's share of the money, $370 billion, went to small businesses.
- An important set-aside of $60 billion went to small banks to help answer complaints that too much of original PPP funds went to large companies.
- About $75 billion targeted hospitals while another $25 billion went to testing.
Paycheck Protection Program (PPP) New Funding
Approximately $310 billion was used to refresh the Paycheck Protection Program, which offers forgivable government-backed private loans, provided companies retain their workforce.
PPP loans of up to $10 million to cover eight weeks of expenses do not have to be paid back if at least 75% of the money is spent on rehiring and keeping employees. Otherwise, the loan comes with a 1% interest rate and must be repaid within two years.
Small Lender Set-Aside
The PPP was so popular it ran out of funds on April 16, 2020, prompting criticism over who did and did not receive forgivable loans. As a result, the new legislation included a set-aside of at least $60 billion of the $370 billion for small lenders, including community banks, credit unions, and community development financial institutions. This set-aside was carved out of the $310 billion PPP allocation.
The small lender set-aside contains no guidance for who gets the loans—only that small lenders get access to the funds.
Economic Injury Disaster Loan (EIDL) New Funding
Another $60 billion went to the existing SBA Economic Injury Disaster Loan (EIDL) program, which offered loans of up to $2 million to companies with fewer than 500 employees. This money could be used to pay off debt, provide payroll, and pay other bills.
Up to $10,000 Forgiveable Loan Advances for EIDL
One of the main attractions of the EIDL program is the potential to receive an up-to-$10,000 ($1,000 per employee) advance on an EIDL loan within three days: $10 billion of the $60 billion authorization for EIDL went toward these loan advances.
The $75 billion allocated by the new legislation was directed to the U.S. Department of Health and Human Services (HHS) to reimburse providers for the cost of treating COVID-19 patients. This included funding to provide diagnosis, testing, and care of these individuals.
Finally, $25 billion was authorized to help develop and implement a national plan to helps states with testing protocols. The funds were further broken down by various jurisdictions and groups including states, localities, tribes, the CDC, National Institutes of Health and others. Areas of concentration included not only testing and contact testing for COVID-19 in individuals but also testing for possible immunity.