HR 266 signed into law; additional Paycheck Protection Program funds are now available

On April 24, following passage by the Senate and House earlier last week, the President signed into law HR 266 - the Paycheck Protection Program and Health Care Enhancement Act (also known as CARES Act 2.0 or as COVID19 stimulus package 3.5). The $480 million legislation focuses primarily on replenishing Small Business Administration (SBA) loan programs that were depleted in mid-April, as well as expanding funding for health care by amending the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  The bill is not the next comprehensive COVID-19 recovery bill but rather is an intermediary step that supports programs and relief established in the CARES Act. From an afterschool and summer learning perspective, the legislation will be most helpful in replenishing the Paycheck Protection Program (PPP) which provides loans and loan forgiveness to small businesses and nonprofit organizations. The PPP application process reopened April 27 at 10:30 AM EDT. 

Here is a quick summary of the major provisions of the Paycheck Protection Program and Health Care Enhancement Act: 

• Increased funding level for the SBA Paycheck Protection Program from $349 billion to $670.335 billion, replenishing the original funds to provide relief to more small businesses and nonprofits. Funding set-asides include:
  • $30 billion for loans made by Insured Depository Institutions and Credit Unions that have assets between $10 billion and $50 billion; and
  • $30 billion for loans made by Community Financial Institutions, Small Insured Depository Institutions, and Credit Unions with assets less than $10 billion. 
• Increased funding level for SBA’s Emergency Economic Injury Disaster (EIDL) grants from $10 billion to $20 billion, including allowing agricultural enterprises with fewer than 500 employees to qualify for EIDL grants.
• Increased funding for SBA’s Disaster Loans Program Account by $50 billion.
• Increased funding for the Department of Health and Human Services Public Health and Social Services Emergency Fund by $100 billion, including $75 billion to hospitals and health care providers, and $25 billion to expand COVID-19 testing capabilities.

As a reminder, the Paycheck Protection Program can support nonprofit and small for-profit afterschool and youth development programs. As originally authorized under the CARES Act, nonprofits and small businesses with fewer than 500 employees are eligible for loans to meet payroll and other qualifying costs. Much of the loan is forgivable if you keep staff on payroll during the loan period (currently March 1 through June 30). This, in essence, turns a portion of the loan into a grant. Loans will be given out on a first-come, first-served basis with the application process having reopened on April 27 at 10:30 AM EDT. Recipients do not have to certify that they are unable to obtain credit elsewhere.

• Loan amount is 2.5 times the organization’s average monthly payroll, with payments capped at $100,000 per employee.
• Up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels through June 30.
• More on the PPP can be found here from the Small Business Administration.

Congress is now expected to turn to the fourth COVID-19 relief and recovery package, which could seek to provide comprehensive support to a wide range of individuals and sectors impacted by the pandemic and resulting business and school closures. Friends and stakeholders of afterschool and summer learning programs can continue to reach out to Congress about the needs of the afterschool field as it works to support students and families impacted by the pandemic.

Learn more about federal COVID-19 response legislation and supports for afterschool.