The CARES Act, passed in late March, promised financial relief for small and mid-sized businesses impacted by the COVID-19 outbreak, but faced serious problems in processing applications, and ultimately ran out of available funds in light of the extreme demand. Late last week, Congress passed a second CARES Act to replenish these funds.
The new bill includes an additional $250 billion for the Paycheck Protection Program, and an additional $60 billion for Economic Injury Disaster Loans through the Small Business Administration. Eligibility requirements, loan amounts and terms, and allowed uses of loan funds remain the same as under the original program, as we discussed in a prior client alert.
The new funding bill includes $60 billion for smaller lenders, allowing community banks to serve smaller businesses – addressing concerns under the first bill that big banks weren’t accepting applications from customers without preexisting business accounts.
If your business has already applied under either program and has not received a response, you should check with your bank to determine where you stand in the process.
If your business hasn’t applied already, you may still do so as soon as possible, using this link for the Paycheck Protection Program Application. The SBA Economic Injury Disaster Loan online application is currently not live due to the lapse in appropriations, but can be found here when it begins accepting applications again.
This is an overview of key provisions of both programs, and additional details and governmental guidance are expected.
For individualized guidance and advice, please contact N. Kane Bennett at 860-338-0428, Nate Baber at 860-381-9628, or Jonathan Shapiro at 203-561-6206.