As businesses of all sizes continue to navigate the pitfalls and opportunities presented by the COVID-19 landscape, there’s been much talk of legislation supporting them through this process. Recently two key pieces of law are making their way through Congress which could mean big things for small businesses in particular. As a business owner, these are worthy of your attention and perhaps a phone call or email to your representatives in the House and Senate.
Senate Bill S.4117, introduced by Senators Cramer, Menendez, Tillis, and Sinema, would if passed “provide automatic forgiveness for paycheck protection program loans under $150,000” among other things. In essence, businesses which benefited from payroll protection loans taken out to address the COVID-19 pandemic can have those loans forgiven if they submit a single-page form within the deadline. In the words of the bill:
. . . with respect to a covered loan made to an eligible recipient that is not more than $150,000, the covered loan amount shall be forgiven under this section if the eligible recipient submits to the lender a one-page online or paper form, to be established by the Administrator not later than 7 days after the date of enactment of this subsection, that attests that the eligible recipient complied with the requirements under section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)).
This is potentially huge news for small businesses in particular, who may have a huge debt burden lifted from their shoulders as part of the ongoing COVID-19 relief effort. It turns payroll protection into a real boon for business continuity and survival and paves the way for similar loan forgiveness efforts from the SBA and other government agencies. The bill has just been submitted and no action has been taken yet, but with strong bipartisan support in the Senate this may progress further, and perhaps sooner than might otherwise be expected.
The second piece of legislation is the CARES Act Provider Relief Fund, which seeks to support the health care institutions and health care providers who have held the line against this pandemic. While the act itself is fairly detailed, in essence, it distributes $175 billion to hospitals and health care providers nationwide. The important news is, rather than a loan, this functions as a one-time payment that may be exempt from repayment, per the FAQ on the relevant DHHS website:
Is this a loan or a grant that I will need to pay back?
Retention and use of these funds are subject to certain Terms and Conditions. If these terms and conditions are met, payments do not need to be repaid at a later date.
As with S.4117, this would represent a huge benefit to health care providers and hospitals of all sizes by offsetting some of the financial burden incurred during the pandemic. While the particulars of each disbursement are subject to the situation of the individual recipient, all eligible parties should look into it further and decide if it’s right for them.
The legislative landscape around COVID-19 and the response to the pandemic is an evolving one, particularly with a tightly contested election looming in November. Further bills addressing the issue are sure to come, and we’ll do our best to keep you informed. Contact us if you have any questions or concerns we are here to help illuminate the blind spots of the business landscape.