Paycheck Protection Program: Stimulus Legislation To Replenish the Paycheck Protection Program by Providing an Additional $310 Billion

Sullivan & Cromwell LLP - April 23, 2020

Earlier today, the U.S. House of Representatives passed the “Paycheck Protection Program and Health Care Enhancement Act” (the “Act”). The Act amends the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to increase by $310 billion the amount authorized for the Small Business Administration (the “SBA”) to commit for loans under the Paycheck Protection Program (the “PPP”). This increase brings the total authorized level to $659 billion. The initial $349 billion in funding authorized by the CARES Act was depleted within two weeks of the program’s launch, and many small businesses were reportedly unable to obtain funds. The Act was adopted on Tuesday in the U.S. Senate by a voice vote and in the U.S. House of Representatives on Thursday by vote of 388 to 5.

Separately, the SBA, in consultation with the U.S. Department of the Treasury, issued an additional response to “Frequently Asked Questions” making it clear that public companies with substantial market value and access to capital markets, as well as other borrowers that have access to other liquidity sources sufficient to support their ongoing operations, likely would not qualify for PPP loans.