Introduction
- On April 24th, President Trump signed a new relief package from Congress totaling roughly $480 billion.
- The relief package is aimed at three key areas:
- Small businesses
- Hospitals/healthcare providers
- Expanded COVID-19 testing
Small Business Relief: $310 Billion
- The bill adds an additional $310 billion to the Paycheck Protection Program (PPP).
- $60 billion of the $310 billion will be set aside for smaller lending facilities, including “community financial institutions, small insured depository institutions and credit unions with assets under $10 billion.”
- The need for additional funding for the PPP became clear last week when the program ran out of funds.
- The Small Business Administration (SBA) reported it had approved over 1.66 million loans totaling more than $342 billion.1
- However, many small business owners criticized how the funds were being allocated: the issuing banks were accused of prioritizing existing customers and large restaurants, and small businesses who desperately needed the financial assistance were unable to access funds before they ran out.
- 1 ABA Banking Journal, SBA Report: 1.55 Million PPP Loans Made As Of April 16 (link)
- An AP report found that a total of $365 million in small-business loans were given to 94 publicly traded companies.2
Healthcare Providers/Hospitals: $75 Billion
- $75 billion to “prevent, prepare for, and respond to coronavirus, domestically or internationally,” and to cover reimbursements to providers and hospitals for healthcare-related expenses or lost revenues attributable to COVID-19.
- These funds can also be used to cover the cost of building temporary structures, leasing properties, medical supplies and equipment.
- 89% of hospitals surveyed report having a two-week-or-less supply of N95 masks, and nearly all the hospitals surveyed have exhausted their supply of at least one piece of personal protective equipment (PPE).3
- PPE costs have surged by over 1,000% since the pandemic hit the United States.4
- It’s unclear if this amount will be sufficient to offset the financial losses suffered by hospitals and healthcare providers.
- Projects suggest that the coronavirus pandemic could cost U.S. hospitals and healthcare providers anywhere from $362 billion to nearly $1.5 trillion.5
COVID-19 Testing: $25 Billion
- $25 billion will be allocated “for necessary expenses to research, develop, validate, manufacture, purchase, administer, and expand capacity for COVID-19 tests.”
- Of that $25 billion, $11 billion is earmarked for states and localities; the rest will be given to other entities (including federal agencies).
- The bill requires states and localities to have a “strategic plan…for testing and increasing testing capacity” in order to access the funds.
Other Features Of The Package
- The bill also provides funding for $50 billion in disaster recovery loans, $10 billion in grants through the Emergency Economic Injury Disaster Loan Program, and $2.1 billion salaries and expenses incurred by the Small Business Administration.6
What Comes Next
- President Trump signaled on Twitter that there are more fiscal relief packages on the way, including those aimed at helping state and local governments recover lost revenues due to COVID-19, infrastructure investment, and payroll tax cuts, among others.
- The details of future packages have yet to be ironed out, but as the economic fallout of the coronavirus pandemic continues, it’s clear that there is more work to be done to revitalize our economy and our markets.
2 AP, Publicly traded firms get $365M in small-business loans. (L ink)
3 Time, U.S. Health Care Workers Are Dangerously Ill-Equipped to Fight COVID-19. (L ink)
4 McKnight’s, Analysis: PPE costs increase over 1,000% during COVID-19 crisis. (Link)
5 FAIR Health, The Projected Economic Impact of the COVID-19 Pandemic on the U.S. Healthcare System. (Link)
6 CNN, Senate approves $480 billion package to help small businesses and hospitals, expand testing (Link)
References: Time, M cKnight’s, F AIR Health, The Wall Street Journal, CNBC, CNN
Disclosure: We did our best to fact check the data points below, but it is important to double-check and validate all data before distributing this content to clients, prospects, or centers of influence.
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