COVID-19 Update | Sunday, March 22 (PM)
March 22, 2020
- Secretary Mnuchin is now referring to direct payments as “direct deposits”, stating that the average payment to a family of four would be $3,000 and that the package is aiming to help people for 10 to 12 weeks.
- Negotiations are continuing and Speaker Pelosi has said there is no deal and the House will draft their own bill.
- Senator Pat Toomey (R-PA) told reporters that the credit facility they are attempting to stand up has two components and that there is a category of funds that will be available to the treasury secretary for direct lending for very distressed and absolutely essential companies.
- Reports indicate that progress was made yesterday on negotiations surrounding boosting unemployment insurance payments, with Senate Republicans agreeing to boost those payments by $250 billion.
- A procedural vote on the package is expected today at 3:00PM. That vote is likely to fail unless there are further compromises among the Republican and Democrats in the Senate.
- Governor Cuomo (NY) laid out what New York is facing, including a 100% increase in hospital beds, and full discussion of the need to take the pandemic seriously.
- Illinois’ stay-at-home order that was announced late last week by Governor Pritzker went into effect on Saturday.
- Elon Musk has promised to use the supply chains that support his companies for help in assembling ventilators.
Below is a high level overview of the some of the key components of the latest text from Senate Republicans (bill text is attached). It is important to note that this is not an agreement. Also attached is a summary released by the Senate Appropriations Committee.
- Authorizes $349 billion for Small Businesses Administration (SBA) 7(a) loans.
- Increases the maximum loan amount for borrowers through SBA’s Express Loan Programs from $350,000 to $1,000,000.
- Directs SBA to reimburse a lender authorized to make a loan at a rate of 5 percent of the balance of the financing outstanding.
- Directs SBA lenders to provide complete payment deferment relief for impacted borrowers for 1 year.
- Requires that loans bear an interest rate in accordance with the maximum interest rate in effect on February 15, 2020.
- States that no collateral shall be required for a covered loan and no personal guarantee shall be required for a covered loan during the COVID-19 pandemic.
- States that the Administration may provide financial assistance in the form of grants to resource partners to provide education, training, and advising to small businesses.
- Waives the matching of funds requirement under the Women’s Business Center Program.
- Provides for loan forgiveness for eligible recipients in an amount equal to the sum of the following costs incurred and payments made during the COVID-19 pandemic:
- Payroll costs;
- Any payment of interest on any covered mortgage obligation;
- Any payment on any covered rent obligation; and
- Any covered utility payment.
- Requests an additional $299.4 billion for the Small Business Administration – Business Loans Program Account.
- Provides small business contracting relief from the date of enactment through September 30, 2021.
- Directs the Treasury Department to establish criteria for insured depository institutions and other lenders to participate in lending under Administration programs.
- Provides for emergency Economic Injury Disaster Loan (EIDL) grants for:
- A startup with no more than 500 employees.
- Any individual who operates under a sole proprietorship as an independent contractor.
- A cooperative with no more than 500 employees.
- An Employee Stock Ownership Plan with no more than 500 employees.
- Provides subsidies for certain loan payments.
- Directs the Department of the Treasury to issue regulations to carry out the act and all amendments to the act no later than 15 days after the date of enactment via Emergency Rulemaking Authority.
- It is important to note that some provisions give treasury 10 days to issue guidance.
- $425 billion for loans and guarantees in support of programs or facilities that provide liquidity to the financial system that supports lending to eligible businesses, states, and municipalities.
- $50 billion for loans and guarantees for passenger air carriers.
- $8 billion for loans and guarantees for cargo air carriers.
- $17 billion for loans and guarantees for businesses critical to maintaining national security.
- $10 billion for Grants-In-Aid for airports.
- $100 million in aid for general aviation airports.
- $20 billion for Transit Infrastructure Grants/public transportation emergency relief.