House passes coronavirus relief package aimed at small business

Small businesses and hospitals will get more money from a $484 billion coronavirus relief package passed Thursday by the House of Representatives, following Senate passage on Tuesday.

For small businesses, the Paycheck Protection Program and Health Care Enhancement Act legislation adds $310 billion to the earlier paycheck relief measure created to help them keep workers employed with loans that were largely forgivable. The original $349 billion slotted for that program ran out quickly, and this latest measure is expected to be promptly signed by the president.

Another $60 billion will go into a separate small business emergency loan and grant program run by the Small Business Administration. The existing Economic Injury Disaster Loan program was expanded to help employers impacted by the crisis with low-interest loans up to $2 million and was also overwhelmed by demand.

Amid concern that smaller employers were unable to access the first-come/first-served PPP program and that customers of larger banks had an advantage, the measure carves out $30 billion for loans from banks and credit unions with $10 billion to $50 billion in assets, and another $30 billion for loans from lenders with less than $10 billion in assets.

Treasury Department guidelines released Thursday warned larger companies with other sources of credit to not apply for a PPP loan unless they can certify that it is needed to continue operating. The guidelines said: "It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification."

Larger companies that have already received PPP loans can repay them by May 7 and "the U.S. government will not challenge lender PPP actions," the Treasury Department said.

The Treasury guidelines also address affiliation tests that look at ownership and other control rights common in venture capital and private equity financing arrangements, and limit aid to fewer than 500 workers among all affiliated companies. A minority shareholder irrevocably giving up those rights would no longer be considered an affiliate of the business, "assuming no other relationship that triggers the affiliation rules," Treasury said.

The legislation also provides $75 billion for hospitals and $25 billion to expand coronavirus testing. During floor debate Thursday, House Financial Services Committee Chairwoman Maxine Waters, D-Calif., dedicated the bill to her sister who she said is dying from the coronavirus.

Following the Senate vote, President Donald Trump tweeted that after signing the bill, discussions will begin on another legislative package aimed at providing fiscal relief to state and local governments, infrastructure investments for bridges, tunnels and broadband, tax incentives for some hard-hit industries and payroll tax cuts to stimulate economic growth.