New Coronavirus Relief Package Signed Into Law

Last week, in the latest effort to provide relief to small businesses impacted by the COVID-19 pandemic crisis, the House of Representatives passed the Paycheck Protection Program (PPP) and Health Care Enhancement Act, which was subsequently signed into law the following day.

The PPP was established in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress at the end of March to provide forgivable loans to businesses to cover payroll, rent, utilities, and other costs. The new legislation prioritizes America’s smaller businesses and adds $310 billion in funding to the program, increasing the total PPP appropriation level to $670 billion.

“I am pleased that we have been able to set aside $60 billion for our nation’s Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), community banks, credit unions, certified development companies and microlenders to directly lend to their small business customers, who are often minority-owned businesses,” said House Financial Services Committee Chair Maxine Waters (D-Calif.) in a statement on the House floor during debate on the legislation.

The legislation sets aside certain amounts for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), including $30 billion for banks and credit unions with $10 billion to $50 billion in assets, and $30 billion for those with less than $10 billion in assets.

CDFIs have proven to be strong partners for small businesses; according to a Federal Reserve survey, small business borrowers have been more satisfied with small banks, rather than larger banks or online lenders.

“The demand for this program is unprecedented and these loans are vital to keeping workers on payroll,” said Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) in a statement. “While this is an important step, we need to recognize it is not a question of ‘if’ this program will run out again, but ‘when.’ We must remain ready to work together to address additional needs.”

 Click here for an overview of the legislation prepared by the House Financial Services Committee.