The Senate Republican Policy Committee released a short document on July 28th that summarizes the “HEALS Act.”

The Senate Republican Policy Committee released a short document on July 28th that summarizes the “HEALS Act.” The part of the summary pertaining to the small business relief provisions is pasted below: 

CONTINUING SMALL BUSINESS RECOVERY AND PAYCHECK PROTECTION PROGRAM ACT

  • Expands what borrowers can spend PPP loans on to include certain operations costs; property damage costs from 2020 public demonstrations that insurance does not cover; payments to suppliers for goods already under contract that the business needs; and costs for complying with COVID-19 health guidelines such as buying PPE.
  • Provides a safe harbor from enforcement actions for lenders who in good faith issued loans based on borrowers’ certifications. Simplifies the loan forgiveness application by allowing borrowers with loans under $150,000 to give a good faith attestation that they complied with the rules. They must retain records for three years. Borrowers with loans between $150,000 and $2 million do not have to give their lender documentation on payroll and other expenses as in the CARES Act, but they do have to certify this information is correct and keep these documents on record for three years.
  • Provides $190 billion of committed and appropriated funds for the PPP and new “PPP Second Draw Loans.” Allows certain entities to take a second draw PPP loan at 2.5 times their average monthly payroll, with a limit of $2 million. The second draw loan aims to assist smaller firms disrupted the most by the pandemic. To be eligible, businesses must have 300 or fewer workers and show they lost 50% or more in revenue in one of the first two quarters of 2020 compared to 2019. To qualify for forgiveness, they must spend 60% of the loan on payroll, leaving 40% for eligible non-payroll costs. Reserves $25 billion for businesses with fewer than 10 employees and sets aside $10 billion for community lenders to access second draw loan funds. Rescinds $100 billion in unspent PPP funds from prior response legislation and instead appropriates it for new program costs.
  • Provides $100 billion for recovery sector loans through the Small Business Administration’s 7(a) loan program. Recovery Sector Businesses can receive two times their annual revenue, with a limit of $10 million. The loan has a 1% interest rate and a 20-year maturity, and borrowers can defer payments for up to two years. Businesses generally must have 500 or fewer workers and meet SBA’s size standards, and they must have lost 50% of their revenue compared to the prior year. They must be in specified low-income census tracts or a seasonal business.
  • Provides $10 billion for an equity investment facility through the SBA’s Small Business Investment Company program. Allows the SBA to provide grants to SBICs that invest in small businesses in low-income areas, those with large revenue losses due to the pandemic, and small manufacturers important to U.S. supply chains.

By Mark Friedlich, Esq., CPA.

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AUTHOR

Mark Friedlich

All stories by: Mark Friedlich