Congress has passed legislation that will provide $380 billion in a second round of small business relief that will augment the $349 billion that was allocated last month under the CARES Act for loans and loan forgiveness.
The House and Senate have reached an agreement on supplemental emergency funding for US small businesses, including lawyers and law firms, that are struggling financially in the wake of the coronavirus outbreak. New legislation that is expected to be promptly signed into law provides $484 billion in federal aid in response to the pandemic, with $380 billion allocated for small businesses, and additional amounts for hospitals and COVID-19 testing.
The recently approved small business funds will build upon the monetary relief that was made available at the end of March through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included over $350 billion in Small Business Administration (SBA) administered loans, grants, and loan forgiveness relief. One of the most prominent features of this aid package was the Paycheck Protection Program (PPP), through which businesses including sole proprietors and self-employed individuals can borrow approximately two months’ worth of payroll expenses (up to $10 million) to cover payroll costs, rent, mortgage interest, group health plan costs, and utilities. What has made PPP loans especially attractive is the provision allowing forgiveness of any loan proceeds spent on permitted expenses (of which 75% must be payroll according to SBA regulations) during the first eight weeks after the loan is funded, assuming there are no pay cuts or layoffs. The CARES Act also expanded the availability of SBA Economic Injury Disaster Loans (EIDL), and made $10,000 emergency grants available to applicants.
The money that Congress allocated for the initial round of small business aid reportedly ran out in less than two weeks, with over 1.6 million PPP applications being approved among the unknown number that were received. In light of this clear need for further funding, the additional assistance that Congress has approved this week is expected to become available in the next several days.
Of the $380 billion that will go to small businesses in this second round of aid, the text of the legislation approved by the Senate earlier this week indicates that approximately $310 billion will fund further PPP loans, and $60 billion of that amount will go to smaller lenders like community banks and credit unions. Another $60 billion is designated for SBA disaster loans and grants.
Given the speed with which the first round of PPP funds became depleted, lawyers and law firms that are interested in applying for these forgivable loans should reach out to their banks as soon as possible. The current PPP application form is available on the US Treasury Department’s website in the CARES Act resources section. You can also search for an eligible lender by entering your zip code on the SBA website.
As always, we encourage you to prioritize health and safety above all else during this difficult time. We remain committed to supporting you and your law practice as you strive to operate your firm and remain available to your clients amid these unprecedented circumstances.
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