The Paycheck Protection Program, originally established as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), has provided economic relief to many businesses impacted by the coronavirus. The CARES Act originally allocated $349 billion to the program, a sum that was depleted in less than two weeks. On Thursday, April 16, the SBA published a Lapse in Appropriations Notice and indicated additional applications would not be accepted. Following this lapse, Congress passed the “Paycheck Protection Program and Health Care Enhancement Act,” also knowns as the CARES Act 3.5. In addition to providing funding for coronavirus testing and hospital resources, the CARES Act 3.5 provides additional funding for the Paycheck Protection Program and for SBA Disaster Loan programs.
Additional Funding for the Paycheck Protection Program
The CARES Act 3.5 provides an additional $310 billion in funding for the Paycheck Protection Program, which allowed banks to begin submitting applications to the SBA again on Monday, April 27. The Act also set aside part of this funding for applications submitted through smaller banks and credit unions:
- $30 billion for applications from banks and credit unions with $10 billion to $50 billion in consolidated assets
- $30 billion for applications from banks and credit unions with less than $10 billion in consolidated assets
Additional Funding for SBA Disaster Loans
The CARES Act 3.5 also provided an additional $10 billion in funding for Economic Injury Disaster Loans (EIDL) and $50 billion for SBA disaster loans funded through the Disaster Loans Program Account. However, the SBA has not reopened applications for disaster loans at this time. Instead, it is continuing to process loans applications that were submitted prior to the original lapse in funding
The Big Picture
Businesses that have suffered economic impact from the coronavirus may once again begin applying for Paycheck Protection Program loans. As seen from previous funding allocations, applications should be submitted as soon as possible because it is likely these funds will not last long.
