SMB Relief Bill Passes: Congress Reaches Deal on $484 Billion Funding Package to Help Small Businesses

The deal focuses on replenishing funds for small business loans, but includes money for hospitals and testing

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More than $380 billion of the SMB relief funds goes to the Paycheck Protection Program and Economic Injury Disaster Loan program

This story was last updated on April 24, 2020

President Trump has signed the $484 billion coronavirus relief bill into law, which Congress overwhelmingly passed earlier this week. The law includes:

  • $322 billion for the PPP, including $60 billion specifically for small banks
  • $60 billion for Economic Injury Disaster Loans
  • $75 billion for hospitals
  • $25 billion for coronavirus testing

This is the fourth coronavirus bill to move through Congress.

Original story from April 21, 2020: 

The Senate has passed another coronavirus relief bill to help small businesses, which would replenish founds in the Paycheck Protection Program (PPP). The bill moves to the House of Representatives, where members will vote for its passage on Thursday. President Trump is urging the House to pass the bill, so he can sign it into law.

“I urge the Senate and House to pass the Paycheck Protection Program and Health Care Enhancement Act with additional funding for PPP, Hospitals, and Testing,” he tweeted Tuesday.

The initial $349 billion for the PPP dried up last Thursday, just 2 weeks after the program launched. More than 1.6 million applications have been processed, but countless businesses are seeing their applications sit in limbo.

From the beginning, the program has been criticized for its rocky rollout. An overwhelming demand caused some banks to turn away small businesses, while others weren’t ready to process applications due to unclear guidelines given by the federal government.

Small business owners left in cold

Ruth’s Chris Steak House and Shake Shack came under fire for receiving tens of millions of relief funding. Shake Shack ultimately returned its $10 million loan after it become the subject of public scrutiny. Wells Fargo and Chase are being sued by small business owners for unfairly prioritizing loans with large amounts so they could collect bigger origination fees, rather than processing the applications on a first-come, first-serve basis.

Patrick West, founder of Be The Machine, said he immediately submitted his PPP loan application to Chase on April 3, the day the program went live.

He requested $75,000, but didn’t hear a word from the bank. “We received no information at all,” he said. “I know I was not guaranteed a PPP loan, but I was expecting some level of service and communication. Now that the data is out, it is clear Chase and most banks favored their largest and most connected customers over truly small businesses.”

Under the PPP, small businesses with less than 500 employees are eligible for loans, which can be forgiven if the borrower does not lay off workers or rehires staff following the 8-week period of the loan origination date.

Calloway Cook, president of Illuminate Labs, said the PPP punished prudent business owners.

“I launched my business in 2019 and barely paid myself a salary, so that I could extend the business runway, but this only allowed me to qualify for a small, 4-figure sum in PPP funding,” Cook said. “If I had paid myself a large salary, I would have theoretically qualified for a larger PPP loan. PPP loans should have been based on operating expenses rather than salary for companies with 3 employees or less.”

Dan Bailey, president of WikiLawn, said Bank of America denied his PPP loan because he didn’t have adequate credit with them, despite the fact he had a business checking account.

“It’s incredibly frustrating, and I’m not completely sure where we’ll raise money for payroll now,” Bailey said. “I’ve told my employees that layoffs and furloughs are the absolute last resort, so I’m hoping we can pivot and bring in some much-needed income. Outside of that, I’m looking into lending institutions that will take an application without existing accounts.”

Economic Injury Disaster Loans come with caveats

The Economic Injury Disaster Loans (EIDLs), run by the Small Business Administration, allows small businesses financially hurt by the coronavirus to apply for low-interest loans of up to $2 million. Businesses can also receive a grant — set at $1,000 per employee, and capped at $10,000. These grants are meant to help small businesses pay immediate expenses while they wait for the loan.

But the EIDL has also been criticized for taking too long. The emergency grants were supposed to be funded within 3 days, but some small businesses report waiting weeks for it to appear in their bank accounts.

More than 3 million small businesses have applied for EIDLs through the SBA,

Businesses can apply for both PPP loans and an EIDL, but can’t use both to cover the same expenses.

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