Second Stimulus Package en Route to White House: Awaits President’s Signature
The second stimulus package designed to help stave off the pending financial crisis resulting from the COVID-19 pandemic has just been approved by both Houses of Congress and is ready for Presidential approval, which is expected to take place later today.
The new funding package includes $484 billion for additional COVID-19 testing, hospitals and small businesses. A big missing component to this latest legislation is aid for state and local governments. Congressional Democrats had pushed for inclusion of an additional $150 billion for state and local governments, but were forced to acquiesce in order to get the bill passed.
The new bill adds $321 billion to the Paycheck Protection Program (the “PPP”), of which $60 billion is earmarked for “underbanked” small businesses that had a difficult time getting loans in the first round of PPP funding (because they didn’t have regular relationships with traditional banks). The deal also includes an additional $60 billion for loans and grants to be made under the Economic Injury Disaster Loan program (“EIDL”). Both the EIDL and PPP loan programs ran out of initial funding last week. Finally, the bill contains $75 billion for hospitals and $25 billion to expand coronavirus testing.
Despite the addition of another $484 billion in economic stimulus, few insiders believe this will be sufficient to get the American economy over the current economic downturn. Additional funding is expected for states and local governments; a sentiment President Trump has supported in the past and agreed to address in future legislation. How much state and local funding will be made available will be hotly debated and could lead to protracted negotiations between both congressional parties and the President.
Two cornerstones of the new bill are the additional funding for the PPP and EIDL. We anticipate new guidelines to be released in the coming days on how the rollout of these funds may differ from the initial grant under the PPP and EIDL. A big criticism from the first round of funding was the difficulty smaller businesses had trying to access the loans. As a result, it is anticipated new rules will be implemented to help truly small businesses get their fair share of the latest installment of PPP funds. Already, Brody and Associates uncovered one interesting nuance in the bill involving the new restrictions applied to EIDL funds. Under the bill, EIDL funds must be used solely to “prevent, prepare for and respond to coronavirus.” Previously, EIDL funds had no restrictions. As a result of this new restriction, the usefulness of EIDL loans will dramatically be decreased.
Brody and Associates will continue to closely monitor the implementation of this new legislation and keep our readers informed.