Paycheck Protection Program and Health Care Enhancement Act (PPP & HCE Act)

Paycheck Protection Program and Health Care Enhancement Act (PPP & HCE Act)

Updated April 24, 2020




What should small businesses do now?

On April 24, 2020, an additional $310 billion was added to the Coronavirus Aid, Relief and Economic Security Act’s Paycheck Protection Program (PPP) under the Paycheck Protection Program and Health Care Enhancement Act (the “PPP & HCE Act”) – after the PPP’s initial $349 billion of funding for small business loans ran out on April 16, 2020.

The original and expanded versions of the PPP offer forgivable loans to small businesses equal to 2.5 times of their average one month of payroll costs – as long as, for the 8 weeks following disbursement of the funds, the business commits to maintaining its payroll rosters by retaining employees or re-hiring laid-off workers by June 30, 2020.  

Businesses may only receive one installment of the PPP, so if businesses have already applied for or received their PPP funds, they should not apply again.

The U.S. federal administration’s PPP program guidelines can be found at:, and the U.S. Small Business Administration's search tool to find a bank that offers PPP loans can be found at:


Equitable Treatment amongst Small Businesses

Approximately $60 billion of the additional funding for PPP under the PPP & HCE Act is set aside for "underbanked" business (i.e., small businesses owned by minorities, women and those in rural areas).

Certification regarding Credit Elsewhere – leads Public Companies to repay their PPP

Based on the Dept. of Treasury’s guidance provided on April 24th, some companies must return funds they received under the PPP.

“Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, 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.


Small and Mid-Sized Lenders

The $310 billion of additional PPP funding under the PPP & HCE Act designates $60 billion be funneled to small and mid-size lenders. This new feature of the funding helps ensure that borrowers applying to small and mid-size lenders won’t be disadvantaged because larger lenders are dominating the SBA submission process. The hope is this additional restriction will help smaller businesses that are more likely to seek aid and funding from small and mid-size lenders.


  1. Business was in operation on February 15, 2020,
  2. Business must have been harmed by the COVID-19 pandemic, and
  3. Must submit the required documentation along with PPP application.

Agricultural enterprises were eligible to apply under PPP under both the original and expanded versions.


SBA’s guidance and “fact sheets”


Calculating your small business PPP requested loan amount:

Average Monthly Payroll Costs for 2019 or early 2020 x 2.5 = Requested Loan Amount

  • Payroll costs include ALL of the following expenses:
  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee in cash compensation (not for non-cash benefits, such as retirement contributions, employee health benefits or taxes);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
  • NOTE: FICA cannot be included in the payroll cost calculation for reimbursement by the PPP.


Applications to Lenders

These loans, while backed by the SBA, are made available through SBA 7(a) lenders. Many lenders are restricting PPP loan applications to existing bank customers to start.  The demand for those loans is expected to be higher than available funds, so businesses interested in these loans should contact their lenders and begin this process quickly.

The SBA’s new guidelines require companies to certify with their lender that they need the loan and cannot access the money from other sources.

Applications can be submitted as follows:

April 3, 2020

small businesses and sole proprietorships

April 10, 2020

independent contractors and self-employed individuals

April 15, 2020 first round of funding for PPP were exhausted and processing of applications ceased

The PPP & HCE Act releases an additional $310 billion in funding for small businesses to receive PPP funds.

Expansion Act permits filing of applications as of:  April 27, 2020 at 10:30 EDT

Many banks already have enough applications that were not processed in the first round to absorb the entirety of the expanded available funds.

The PPP requires banks to fund the loans within 10 days of approval. Most small businesses are reporting that they have received their funds within 1-5 days of approval. Each bank may provide updates for their individual customers.


Summary of PPP Terms:

  • Loan Amounts: The lesser of $10 million or 2.5 months of payroll cost per small business (based on trailing 12 months payroll costs)
  • No Loan Guarantees or Collateral
  • UPDATE 4/25/20: Credit Elsewhere Requirements: The SBA’s new guidelines require companies to certify with their lender that they need the loan and cannot access the money from other sources.
  • Use of Loan Amount: Loan proceeds may pay the following costs: 
    • Payroll support (such as: paid sick leave*, medical, family and costs related to continuation of group health care benefits during periods of leave)
    • Employee salaries, commissions and other compensation
    • Mortgage interest
    • Rent (including rent under a lease agreement)
    •  Utilities
    • Interest under debt obligations incurred before February 15, 2020
  • Interest Rate: 1% percent
  • Length of Loan: 2 years
  • Deferral of Payments: All payments of principal, interest and fees are deferred for at least 6 months and up to one year
  • Forgiveness: “Payroll costs” must constitute at least 75% of the forgiven amount; non-payroll costs (qualifying mortgage interest, utility costs and rent) may constitute no more than 25% of the forgiven amount
  • Payroll Cap: Payroll costs are capped at $100,000 per employee

*If employers provide leave through the Emergency Family Medical Leave Expansion Act or the Emergency Paid Sick Leave Act and receive the available tax credit reimbursement, the EIDL funds may not be used to cover this cost also.

If your company accepts any portion of the grant under the Economic Injury Disaster Loan Emergency Advance (up to the $10,000) through the EIDL, the CARES Act states that the amount of the advance received will count against the forgivable amount of a company’s PPP loan.

Applying for this loan does NOT bind a company to accepting the loan. You can turn it down. 


SBA UPDATES: With the updates and changes to law coming rapidly and often, you may sign up to receive updates from the SBA directly at:

The information above is intended to act as a general resource and therefore does not address all considerations and jurisdiction-specific analyses that may need to be undertaken prior to taking action. Thus, employers should seek specific counsel.