April 17, 2020

Paycheck Protection Program and Economic Injury Disaster Loan Funding Depleted

Paycheck Protection Program represented by a dollar sign and timer.

The Small Business Administration (SBA) announced on April 15 that it is unable to accept new applications for the Paycheck Protection Program or the Economic Injury Disaster Loan Program because its appropriations have run out.

Funding for both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program came through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act allocated $349 billion to the SBA for guaranteed emergency loans to qualifying organizations with 500 or fewer employees, and $10 billion to support the SBA’s EIDL program. Congress is expected to act quickly to expand the funding for the program now that the funds have run out.

In the interim, the Federal Reserve’s recently unveiled Main Street Lending Program may provide additional liquidity support for organizations financially affected by the COVID-19 pandemic. A broad range of organizations are eligible for the program, which includes two types of loan facilities: the Main Street New Loan Facility and the Main Street Expanded Loan Facility. Both facilities issue loans with a four-year maturity using the SOFR interest rate plus 250-400 basis points, and an origination fee of 100 basis points. Principal and interest payments on Main Street Lending Program loans will be deferred for one year and organizations would not be subject to a prepayment penalty. (For more details on the program, see our article here).

Organizations with more urgent cash needs may consider “upsizing” an existing loan via the Main Street Expanded Loan Facility. Those without an existing lending relationship are encouraged to apply for the Main Street New Loan Facility. Line of credit and asset-based lending facilities provide other options for funding sources.

Our team will continue to provide updates on the funding available for coronavirus relief as information becomes available. For questions about the COVID-19 loans and capital assistance, please reach out to a member of our team.

Coronavirus Relief Provisions

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