The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed by President Donald Trump has provisions to help larger businesses navigate the COVID-19 crisis.
Under the CARES Act, the Coronavirus Economic Stabilization Act of 2020 Fund is created for larger businesses, nonprofit companies, states, and municipalities. The $500 billion package includes the following loan and loan guarantee provisions:
- $25 billion for passenger planes;
- $4 billion for cargo planes;
- $17 billion for businesses critical to maintaining national security; and
- $454 billion for distressed businesses meeting specified criteria, determined by the Secretary of the Treasury.
Terms and Conditions
- No stock or equity buybacks or dividends and other capital distributions until 12 months after the loans or guarantees are concluded;
- Qualifying companies must retain at least 90% of their employment levels as of March 24, 2020 until September 30, 2020;
- Accept salary limitations on officers and high-earning employees until 12 months after the loans and guarantees are concluded;
- A maximum five-year term;
- Not conditioned on entering into, or re-negotiating a collective bargaining agreement;
- Any other conditions deemed appropriate by the U.S. Secretary of the Treasury.
- Must be domiciled in the United States;
- Majority of employees based in the United States;
- Incurred direct or indirect losses attributed to COVID-19 that jeopardizes continued viability;
- Credit is not reasonably available from other sources;
- Not qualified for adequate relief under any other loan or loan guarantee provision of CARES.
The Coronavirus Economic Stabilization Act expires on December 31, 2020. Any loans or loan guarantees, and other investments outstanding after that date may be restructured or modified but not forgiven. The Secretary of the Treasury has 10 days from the enactment of the CARES Act to publish procedures for applications.
The funding provided for larger businesses in this provision of the CARES Act is separate from the Paycheck Protection Program, which is for businesses with fewer than 500 employees.
Small businesses already have access to disaster loans under the existing Small Business Administration’s Economic Injury Disaster Loan Program.
Staff Contact: Valerie Nera