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$484B More in Stimulus Funds Headed for Release: What’s Included, What’s Not

This is a truncated version of an article is sourced from Nonprofit Quarterly. The author is Steve Dubb. View the full article.


By voice vote on Tuesday afternoon, the US Senate approved a $484-billlion bill designed to boost the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed last month. Two Republican Senators, Mike Lee of Utah and Rand Paul of Kentucky, voiced opposition to the bill on the floor of the Senate but let it go forward without objection. A vote by the US House of Representatives is expected tomorrow.


The new 25-page bill is actually not a standalone bill, but instead it amends last month’s 841-page CARES Act, which leads to some odd language in places. For instance, on page one is the following sentence: “Title I of division A of the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116–136) is amended in section 1102(b)(1), by striking ‘$349,000,000,000’ and inserting ‘$659,000,000,000’.”This, by the way, is the provision that adds $310 billion to the Paycheck Protection Program. It’s not every day that nearly $1,000 per capita is spent in a single sentence!


Two weeks ago, US Treasury Secretary Steven Mnuchin attempted to pass a simple bill that would have allocated an additional $250 billion to the Paycheck Protection Program and nothing more. However, Democrats wanted the bill to also fund hospitals, coronavirus testing, food stamps, and state and local governments. In essence, the Democrats won on the first two and lost on the last two. The Democrats did also succeed in expanding small business funding, creating a carve-out for smaller lenders.

Specifically, the new legislation, or CARES patch—called “CARES 1.5” by some—includes the following:

  • $310 billion in replenished funds for the Paycheck Protection Program (PPP), the main vehicle for providing assistance to nonprofits and businesses with 500 employees or fewer to get forgivable loans to cover payroll costs for an eight-week period.

  • $12 billion for PPP administrative costs

  • $50 billion for the SBA’s Economic Injury Disaster Loan program

  • $10 billion for the SBA’s Emergency Economic Injury Grant program

  • $2 billion for SBA salaries and expenses

  • $75 billion in emergency money for our health system

  • $25 billion to increase testing and contact tracing capabilities

The following details some of the key implications of the legislation’s provisions.

Paycheck Protection Program

Although the program has only been in existence for a few weeks, the Paycheck Protection Program, including its many travails, is well known by now. Of more than 6 million eligible nonprofits and small businesses with employees, only an estimated 1.7 million got funded. It is worth recalling that the first $349 billion was claimed within two weeks of the funds being made available.


Adding $310 billion to the $349 billion program will help reach many of the over four million nonprofits and small businesses not funded in round one, but it still may not be enough. Some bankers estimate that as much as $1 trillion total (i.e., another $350 billion above what was just passed) might be needed to cover all qualified applicants.


That said, the new bill does add an important new signifying twist to the program. While $250 billion of the $310 billion will be disbursed the exact same way as in round one, the other $60 billion will be allocated, as Sen. Chuck Schumer (D-NY) explains in a “dear colleague letter,” by small lenders and community-based financial institution. Half of this $60 billion is set aside for mid-size institutions with assets between $10 and $60 billion, and the other $30 billion is reserved for community development financial institutions and other credit unions and banks with under $10 billion in assets. The goal behind these rules, Schumer says, is “to serve the needs of unbanked and underserved small businesses and nonprofits” with a focus on rural businesses and business owned by women and people of color.


Please see the advice given in yesterday’s feature on preparing to apply for this program, including our suggestion that nonprofits find a friendly small lender. [Nonprofits without existing relationships with a local bank/banker -- you may be able to apply through IFF. Learn More.]

Economic Injury Disaster Loan (EIDL) Program

If the PPP rollout was poor, the EIDL program rollout was, if this is possible, even worse. As Tim Delaney of the National Council on Nonprofits explained in NPQ, the EIDL program was designed to allow for emergency $10,000 cash grants. But unlike the PPP, the EIDL program can be used by contractors, like artists. Alas, that $10,000, once US Small Business Administration officials did the math, became $1,000. The new bill doubles the cash grant budget from $10 billion to $20 billion, which probably doesn’t get you back to $10,000, but maybe $2,000? There is also a $50 billion infusion of loan capital, which could leverage loans of up to $300 billion.


This is a truncated version of an article is sourced from Nonprofit Quarterly. The author is Steve Dubb. View the full article.

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