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PEI Industry Alert: New PPP Funding; Main Street Lending Program

April 22, 2020

The U.S. Senate yesterday approved the $484 billion Paycheck Protection Program and Health Care Enhancement Act. The House is expected to pass the COVID-19 relief bill tomorrow and send it to President Trump for signature.

Most important for PEI members: The legislation provides $60 billion in emergency injury disaster loans (EIDL) and $310 billion for the popular Paycheck Protection Program (PPP). PPP offers forgivable loans to small businesses (fewer than 500 employees) that retain or quickly rehire their workers. The PPP’s initial $349 billion funding lasted only 14 days.

Because the new $310 billion also will go quickly, PEI members interested in this program are advised to contact their lending institutions immediately.

Also expected to open within the next few days is the Main Street Lending Program (MSLP), which will offer low-interest 4-year loans to companies employing up to 10,000 workers. The minimum loan size is $1 million, and principal and interest payments will be deferred for one year. Unlike the PPP, however, these loans are not forgivable. Firms seeking MSLP loans must make reasonable efforts to maintain payroll and retain workers.

After announcing the program on April 9, the Federal Reserve received more than 2,000 public comments on its preliminary term sheets for new and expanded MSLP loans. The National Association of Wholesaler-Distributors (NAW) asked for changes to language that appears — perhaps inadvertently — to exclude S corporations and other pass-through entities from MSLP funding. PEI is a member of NAW and fully supports the NAW comment because many PEI members are S corps. You can read the NAW letter here.

 
Rick Long
Executive Vice President
General Counsel

If you have questions or feedback on PEI Industry Alerts, contact Rick Long at rlong@pei.org.