Among the COVID-19 relief provisions in the CARES Act is an expansion of the income and wage exclusions under Section 127 of the Internal Revenue Code to allow employers to make student loan payments on behalf of their employees. Generally, Section 127 educational assistance programs allow individuals to exclude from gross income
Federal Reserve Board Announces Additional Support for Small and Medium-Sized Businesses
By Andrew Cross and Andrew Smetana
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.…
Small Businesses, Independent Contractors, And Sole Proprietors: Take Advantage of Government COVID-19 Relief Before The Money Runs Out
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.…
CARES Act Considerations for Hospitality Companies
By Elizabeth Cooper, Daniel Marre, Neva Wagner
On Thursday, April 2, 2020, the Small Business Administration (SBA) released its interim final rules on the implementation of sections 1102 and 1106 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. These sections address the Paycheck Protection Program (PPP), which was created when the…
SBA Releases New Guidance on Affiliation
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 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.…
Updated Guidance and New Application Form Released for Paycheck Protection Program Loans
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).…
Summary of Tax Provision of the Families First Coronavirus Response Act and Certain Tax Filing Changes
The Families First Coronavirus Response Act provides tax credits against employment tax liability for COVID-19-related sick leave.
The IRS has pushed back several filing and payment obligation dates. Read More
Government Financing Options for Mid-Size and Large Companies Impacted by COVID-19
Authored by Joe Bailey, Andy Smetana
On March 27, 2020, the House of Representatives passed and President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an approximately $2 trillion relief measure to address the COVID-19 outbreak and economic fallout. The portion of the CARES Act referred to as the Coronavirus Economic Stabilization Act of 2020 (CESA) provides $500 billion to the Department of the Treasury’s (Treasury) Exchange Stabilization Fund for emergency relief to distressed industries. This includes relief for certain specified industries, such as air carriers, as well as a loan program for mid-size businesses with 500-10,000 employees (the Mid-Size Business Loan Program). The loan programs authorized under the CESA are separate from the Paycheck Protection Loans (PPP Loans) for smaller businesses and the Economic Industry Disaster Loans (EIDLs) described in a separate Perkins Coie LLP blog found here.…
Comparison of CARES Act Loan Programs
Authored by Mike Avent, Joe Bailey, David Fletcher, Teri Lindquist, Andy Smetana, and Kris Yoshizawa
As has been widely reported, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020 as an approximately $2 trillion relief measure to address the COVID-19 outbreak…
Summary Charts of Employer Measures for Companies Affected by COVID-19
Authored by Wendy Moore
We appreciate that employers are thinking strategically about preserving their workforces while extending their runways to weather the current turbulent environment caused by COVID-19. Employers are exploring a variety of workforce actions in a rapidly evolving regulatory environment. The timing and magnitude of these actions can affect access to federal funds…