New Funding and Guidance for Small Businesses Applying for Federal Coronavirus Relief

On April 24, 2020, President Trump signed the much anticipated $484 billion coronavirus relief package, which includes $380 billion towards the Payroll Protection Program (“PPP”) as established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES”).

The U.S. Department of the Treasury also released a new set of FAQs and an interim final rule on the PPP.  This new guidance clarifies that private equity firms and hedge funds are not eligible for PPP funds.  Similarly, it states that large publicly traded companies likely will not be eligible.

The rule outlines that an entity applying for a PPP loan must certify that “’[c]urrent economic uncertainty makes this loan request necessary to support [its] ongoing operations.” Treasury has continued to refine the PPP in an effort to assist small businesses that truly have a need. As such, the rule also creates a safe harbor so that if you applied for a PPP loan prior to April 24, 2020 but now have concerns whether it is “necessary to support your operations” you may repay the loan in full by May 7, 2020 without penalty.

Today’s passage of the additional funds and the Treasury’s clarifications should bring some temporary relief to small businesses.  If you have previously applied for the PPP or other Coronavirus relief and are wondering what next steps are, see our past newsletter here.