By Andrew Cross and Andrew Smetana

Introduction

As has been widely reported, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides approximately $2 trillion in relief to address the COVID-19 outbreak and economic fallout.  This legislation and other recent legislation related to the COVID-19 outbreak include several programs that are designed to provide financial support to small and medium-sized business.  One such program is an expansion of the Federal Reserve Board’s Main Street Lending Program (the “Main Street Program”).  On April 9th, the Federal Reserve Board announced the established two facilities that together will provide up to $600 billion of funding for the Main Street Program. This makes funding available for businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues, including companies that may not qualify for the Paycheck Protection Program.  Notably, any business that borrows money under the Main Street Program will be subject to limitations on (i) executive compensation, (ii) its ability to pay a dividend or distribution, and (iii) if it is a public company, its ability to repurchase its shares.

Authored by Joe Cutler, Michelle Han, Anna Joy and Will Gillis

We have been hearing from community organizations and our pro bono partners that some of our community’s smallest and most vulnerable small businesses either do not know about the resources available to them under federal relief programs or are overwhelmed with information and unsure about how to proceed. Still others mistakenly believe that they do not qualify for state and federal programs, even though there are several programs specifically tailored to assist them. The biggest concerns for small businesses include payroll, rent, and utilities. Fortunately, government programs exist to help meet these obligations.

This post summarizes the programs offered through the Small Business Administration for which you and your business may qualify.

On April 3, 2020, the Small Business Administration (SBA) released its second Interim Final Rule in as many days addressing the affiliation rules that apply to the Paycheck Protection Program (PPP). A copy of the second Interim Final Rule can be found here. Those in the Venture Capital and Private Equity industries are hoping that additional guidance will be issued to ease the applicability of the affiliation rules to their portfolio companies under the PPP.  That did not happen with the second Interim Final Rule and accompanying guidance issued on April 3, which accompanying guidance can be found here. No new exclusions were added and the exclusions still apply only to:

• Any business concern with not more than 500 employees^[1] that, as of the date on which the loan is disbursed, has been assigned a NAICS code beginning with 72;
• Any business concern operating as a franchise that is assigned a franchise identifier code by the SBA; and
• Any business concern that receives financial assistance from an SBIC.

This is an evolving area, and it is possible that additional guidance will be released in the coming week on the PPP.  As of April 4, 2020, here is what potential applicants need to know.

Authored by Mike Avent, Joe Bailey, and Andy Smetana

On Thursday, April 2, 2020, the Small Business Administration (SBA) issued an interim final rule that became effective immediately, implementing provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) regarding Paycheck Protection Program (PPP) Loans . In addition, the SBA released an updated application form for PPP Loans (Form 2483), a copy of which can be found here. These materials clarify, and in some instances change, the requirements and terms of the PPP Loans. Because the SBA has announced that loan applications will start being accepted today (April 3, 2020), anyone in the process of applying for a PPP Loan should pay close attention to the changes.

Below is a summary of key points in the interim final rule and the updated application form that may be of interest to companies that are considering a PPP Loan. These updates supplement prior summaries posted on our blog providing guidance for businesses regarding coronavirus (COVID-19).