Small Business Overview (1-500 employees)

The definition of small business is organizations with 500 or fewer employees, including 501(c)3
organizations and private practices.

Intent / Overview:

• $349b earmarked for small businesses out of the $2T bill.
• To provide debt relief on existing loan.
• Cover payroll expenses and mortgage interest and related utilities
• Assist with rent expenses, employer tax contributions, etc.
• Loans referred to as “paycheck protection loans” and are fully guaranteed by the federal
  government until 12/31/2020.

Program Details:

• Eligible businesses for small business loans are those with 500 or fewer employees.
• Loan commitments during period of February 15, 2020 and ending June 30, 2020.
• Entities must maintain its employment level as of March 24, 2020 and until September 30, 2020,
  as deemed practical and to not exceed a reduction of 10% from this date.
• Individual loans estimated to cover six weeks of payroll, capped at $1,540 per week per
  employee.
• Maximum loan amount to be the lesser of $10m or a company’s average total monthly payroll
  expense for the previous year, multiplied by 2.5.
  • Limited provisions to potentially allow for loans to be forgiven and therefore be a grant.
    The amount to be forgiven equates to the total payroll costs, mortgage interest, rent,
    and specific utility payments during the 8-week period mentioned above.
  • To apply for forgiveness, employer must submit documentation verifying the number of
    employees and pay rates, cancelled checks reflecting mortgage, rent and utility
    payments.
  • Reduction in forgiveness if employer reduces workforce during the 8-week period
    compared to other periods in 2019 or 2020 or reduces salary paid by
• Application Process / Criteria:
  • To be available no later than 10 days after passing of bill and available until June 30th.
  • Businesses must have proof of previous six weeks of payroll and then verify payment to
    employees for eight weeks after receiving the loan.
  • Banks will be responsible for facilitation and deployment of funding through the Small Business Association (SBA) via a newly developed government lending agency.
  • Federal Reserve plans to deploy a new program called the Main Street Business Lending Program to complement the SBA with the lending responsibilities.
• For those with existing SBA loans, principal and interest will be waived for six months.

Economic Injury Disaster Loans (Expanded access by the CARES Act)

• Outline of the original program: https://corporate.findlaw.com/law-library/the-facts-abouteconomic-injury-disaster-loans-for-small.html
• First come, first serve basis and used to pay for COVID-19 related sick leave, mortgage, rent and
  other overhead.
• Immediate advance of up to $10k for applicants and will not be required to be repaid.
• https://disasterloan.sba.gov/apply-for-disaster-loan/index.html

Payroll Taxes

• Loans to be provided and will allow for deferment of payroll taxes. While not forgiven, this
  provides an immediate cash relief.
  • Specifically, tax credits will be issued, thereby allowing them to defer on related taxes in
    order to pay employees.
  • Delay for all of 2020, pay 50% in 2021 and the remaining 50% in 2022.
  • Businesses must continue to employ their employees through the virus (No specific
    timeframe parameters provided), even those that have / are in process of closing.
• Credit against the employer’s 6.2% share of Social Security payroll taxes for 2020 equal to 50%
  of the qualified wages paid to each employee ending on 12/31/202.
  • Operations must have been partially or fully suspended during any calendar quarter for
    2020.
  • Business remained open, but gross receipts for any quarter less than 50% of the same
    quarter in 2019. Credit to be applicable for each respective quarter until the point in
    which receipted are at least 80% of the comparable quarter in 2019.
  • Above employee retention not available for those that take part in the payroll
    protection loan program.
• Increased timeframe and amount for unemployment insurance.
• For pass-through businesses (Those not subject to corporate income tax such as sole
  proprietorships, partnerships, and S corporations) would realize ‘loosened’ net operating losses.

Mid-sized Business Overview (500-10,000 employees)

Organizations between 500 and 10,000 employees. Hospitals fitting this definition are being supported by the specific hospital provisions already summarized but may also be eligible for these mid-sized business provisions.

• Annualized interest rate to not exceed 2%. For first 6 months, loan may be subject to no
  principal or interest due.
• Funds received to be used to retain at least 90% of the recipient’s workforce, at full
  compensation and benefits, until September 30, 2020.
• May not pay dividends or repurchase any shares of entity.
• May not outsource or offshore jobs for the duration of the loan and subsequently, two years after repayment of the loan.
• Business must remain ‘neutral’ in any union organizing efforts during the loan.

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