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Paycheck Protection Program and Healthcare Enhancement Act: Additional Funding

President Trump has signed into law the Paycheck Protection Program and Healthcare Enhancement Act, a $482 billion relief package. This law, also referred to as "Phase 3.5," increases aid to small businesses through the Paycheck Protection Program (PPP) and the Economic Industry Disaster Loan (EIDL) initiative. It also provides additional funding to hospitals to expand their virus testing capabilities. 

Additional Small Business Administration (SBA) Funding

Paycheck Protection Program

Soon after financial institutions began accepting applications for PPP loans, it became clear that additional funding was needed. The SBA stopped accepting new applications on April 16 due to lack of funds. This latest law includes another $310B in funding and a separate allocation of $10B for administrative costs (such as fees paid to lenders).

The law sets aside $60B in funding for insured depository institutions, credit unions, and community financial institutions for the PPP. Community financial institutions are defined as minority depository institutions, certified development companies, microloan intermediaries, or state and federal credit unions. The funds will be allocated as such:

  • $30B for loans made by insured depository institutions and credit unions with an asset size of $10B to $50B
  • $30B for loans made by community financial institutions, small insured depository institutions, and credit unions with less than $10B in assets

Emergency Disaster Loans

The Emergency EIDL program also received additional funding of $10B. It received an initial appropriation of $10B. Small business owners who are eligible to apply for an EIDL can receive an advance of up to $10,000 to help overcome temporary loss of revenue experienced due to the COVID-19 pandemic. An additional $50B is allocated for the EIDL program as well.

The law allows agricultural enterprises, as defined by section 18(b) of the Small Business Administration Act with no more than 500 employees, to receive EIDL grants and loans.

Once these funds are exhausted, it will be up to Congress to appropriate additional funding. 

Supplemental Funding for U.S. Department of Health and Human Services (HHS)

Funding for Health Care Providers

This law includes $75B for hospitals and healthcare providers to support the need for COVID-19 related expenses, as well as lost revenue. The funds can be used for:

  • Building or construction of temporary structures
  • Leasing of properties
  • Medical supplies and equipment (including personal protective equipment and testing supplies)
  • Increases in workforce and training
  • Emergency operations centers
  • Retrofitting facilities and surge capacity

The funding is available until expended.

Funding for a National Testing Strategy

$25B will be appropriated to begin a national, comprehensive testing strategy. These funds will cover expenses associated with the research, development, validation, manufacturing, purchase, administration, and expansion of capacity for COVID-19 tests.

Testing Funds for State and Localities

States, localities, territories, and tribes will receive a total of $11B to develop, purchase, administer, process, and analyze COVID-19 tests, scale-up laboratory capacity, trace contacts, and support employer testing. Thirty days after the enactment of this law, the governor or designee of each state or local government receiving the funds must submit its plan for COVID-19 testing to the HHS Secretary.

Federal Research Activities and Grants

Several HHS departments received funding under the laws to expand research activities to improve state and local COVID-19 testing capabilities. This includes:

  • $1B to the Centers for Disease Control and Prevention (CDC) for laboratory capacity expansion and contact tracing
  • $1.8B to the National Institutes of Health (NIH) to develop and implement testing and associated technologies
  • $1B to the Biomedical Advanced Research and Development Authority (BARDA)  for advanced research, development, manufacturing, production, and purchase of COVID-19 tests or other related supplies
  • $22M for the Food and Drug Administration (FDA) to support diagnostic, serological, antigen, and other tests

What’s Next?

Although this legislation provided additional funds for the PPP and EIDL, there were no changes made to the programs. In the several weeks since the PPP and other COVID-19 related programs began, the Department of Treasury and the SBA continue to publish significant guidance to answer questions and concerns. To read a copy of the FAQs, please click here. 

As the pandemic continues, Congress is now looking toward a Phase 4 legislation to include such items and funding for states and local governments, unemployment insurance, and additional funding for medical supplies for coronavirus testing. Wolf & Company continues to monitor guidance submitted by government agencies and examine the impact it has on our clients. Please visit our COVID-19 Resource Center for latest information and insights. If you have any questions, or are wondering how your company can take advantage of any of these programs, please contact any Wolf professional for assistance.