HEALS vs Heroes: What Can Small Businesses Expect for a Second Stimulus?

By Katherine Goelz

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress with bipartisan support and signed into law on March 27. The CARES Act provided $2 trillion in economic aid to individuals and their dependents and small businesses. For businesses, the CARES Act offered two loan plans through the Small Business Administration (SBA): Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).

The PPP received $659 billion in overall funding. PPP-eligible small businesses were those with fewer than 500 employees; the loans covered payroll costs, operating fees, mortgage payments, rent, utilities, and other debt obligations incurred before the initial “covered period” of June 30. Each eligible business was able to apply for a two-year loan of the lesser of a $10 million maximum amount or 2.5 times the borrower’s average monthly payroll for the past 12 months. The extended deadline to apply for a PPP loan ended on August 8.

The EIDL program received $20 billion in overall funding, and the same small businesses were able to apply.  If eligible, the loan covered $1,000 per employee, up to a $10,000 maximum. The SBA is still accepting EIDL applications on their website.

As we wait for Congress to restart negotiations on the second stimulus program for individuals and businesses, it is unclear what the package will look like or when it will be implemented. Congressional Democrats and Republicans had been attempting to strike a deal for some time, but political disagreements and the summer recess stalled negotiations in early August.

The Health and Economic Recovery Omnibus Emergency Solutions Act (The Heroes Act) was passed by The House of Representatives in May, and was then moved to the Senate, where Republican Senate leadership called the Heroes Act “dead on arrival.” In July, Senate Republicans proposed the Health, Economic Assistance, Liability Protection, and Schools Act (HEALS Act), but Senate Democrats have deemed the bill “totally inadequate.” Although both proposals arose from the CARES Act, there are several differences between them, primarily the cost of the bills.

The House-passed Heroes Act, at a cost of approximately $3 trillion, contains provisions for a second stimulus payment but does not provide additional funding for the PPP. It does, however, reopen and extend the PPP application period to December 31, 2020, and expands eligibility to nonprofit organizations that are deemed a critical access hospital. The Act also establishes a “Heroes Fund” that would provide grants for employers to pay essential workers an additional $13/hour up to a maximum of $10,000.

The Senate-proposed HEALS Act is comprised of eight bills costing approximately $1 trillion. It includes a second economic-impact payment similar to the CARES Act, which grants an additional $190 billion for the PPP fund and allows businesses who have experienced a 50% reduction in gross revenue to request a second PPP loan of up to $2 million, even if they have already received a loan from the first stimulus program.

Although it is uncertain when a deal will be reached on the second stimulus package between Congressional Democrats and Republicans, what is certain, however, is that time is running out for many Americans who are relying on the second round of financial support from the federal government.

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