24 April 2020

Congress Passes the CARES Enhancement Act Targeting Small Businesses and Health Care Providers

***Information and guidance in client updates was up to date at time of publication. During the pandemic, information and guidance has been changing rapidly. If you have any questions about the information contained in a client update, please contact the author(s) or your Miller Johnson attorney.***

On Friday April 24, 2020, Congress passed the Paycheck Protection Program and Health Care Enhancement Act (the Relief Bill) and it was signed into law by President Trump.  The Relief Bill is a supplement to the CARES Act and adds an additional $380 billion for small businesses loans and also includes $75 billion for hospitals and $25 billion for coronavirus testing.

Additional $75 Billion for Health Care Providers

The Relief Bill adds $75 billion to the Public Health and Social Services Emergency Fund which will be used to support health care providers responding to the coronavirus pandemic. The funding grants can bused for health care related expenses or last revenues attributable to coronavirus.  Those funds are on top of the $100 billion previously added to the Emergency Fund by the CARES Act.  Just as in the CARES Act, hospitals, physicians and suppliers are all eligible for the funds provided they are enrolled in Medicare and Medicaid. Just as in the CARES Act, the $75 billion can be used for construction of temporary structures, medical supplies, personal protective equipment and testing supplies. The Relief Bill references an application for funds, but no application has been made available to providers and it remains to be seen whether funds will be distributed via individual applications or through more general grants. The government has already distributed $30 billion from the Emergency Fund to health care providers and issued another $40 billion in funds the same day the Relief Bill was signed into law.

$25 Billion for Covid-19 Testing

The Relief Bill also allocates $25 billion for research, development, validation, purchase and administration of COVID-19 tests. That $25 billion will be divided between a number of entities and organizations including states, tribal organizations, rural health clinics, the Center for Disease Control (CDC) and the National Institute of Health. $11 billion from the fund will be distributed to states, localities and tribal organizations to develop, purchase, administer, process and analyze COVID-19 tests. States and localities receiving these funds are required to submit a plan for COVID-19 testing including the number of tests needed, estimates of laboratory and testing capacity and a description of how the funds will be used to expand testing. Under the Relief Bill, testing funds will not be distributed directly to health care providers or employers looking to develop or administer tests. Instead, health care providers, labs and other clients looking to develop, purchase or administer COVID-19 tests will have to look to state and local officials.

$310 Billion for Small-Business Loan Program

Through amendments to the CARES Act, the Relief Bill provides for $310 billion in additional appropriations for the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), $50 billion for the SBA’s Economic Injury Disaster Loan (EIDL) program and $10 billion for the EIDL emergency advance program administered by the SBA.  Of the $310 billion in new PPP funding, $60 billion is set aside for smaller and local credit unions, banks and community financial institutions to originate PPP loans for “underbanked” borrowers.

Except for the increased appropriations, terms of the PPP, EIDL and EIDL emergency advance programs remain essentially unchanged by the Relief Bill (other than expanding EIDL access to agricultural enterprises with 500 or fewer employees).

In addition to the SBA funding, the Relief Bill provides $75 billion in assistance for hospitals and healthcare providers and $25 billion to expand testing for COVID-19 across the United States.

Miller Johnson discussed the anticipated increase in SBA appropriations (as well as several recent developments in PPP guidance from the SBA) in a webinar on Friday, April 24, 2020.  Click here to watch the webinar.

Questions about the Paycheck Protection Program and Health Care Enhancement Act should be directed to the authors or your Miller Johnson attorney.