The initial $349 billion fund allocated for economic relief for small businesses facing COVID-19 challenges ran out in just two weeks, but an additional $320 billion in funding was approved by the Senate Tuesday afternoon and is set to pass through the House.
The money will go towards the Paycheck Protection Program (PPP) which provides loans to small businesses to keep them afloat during the pandemic. If the businesses can demonstrate after 12 weeks that 75 percent or more of the funds went towards payroll, the loan can be forgiven. This is a logical policy to keep businesses from going under and an effective strategy to pay workers via loans to their employers rather than through unemployment benefits.
$30 billion of the funds will be designated for community banks to give them a fighting chance against larger institutions. Another $60 billion will go to the Economic Injury Disaster Loan program where businesses can ask for a portion of the loan as an advance if it is being applied to working capital.
Although its roll out was chaotic with banks unprepared to accept loan applications and gridlock in Congress over the program itself, hopefully the additional funds will allow small business owners who were shut out in the first round of aid to access loans.
Once approved by the House, the total COVID-19 relief package will be $484 billion including $75 billion for hospitals and $25 billion for expanded testing.
