Congressional Help up to $10 Million for Each Transportation Company: COVID-19 Transportation Update - Wednesday, March 25, 2020
Urgent Small Business Relief of up to $10 Million for Each Transportation Company Is Almost On Its Way!
Earlier today the leaders in the Senate reached an agreement on the terms of a stimulus package – The Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”). This will be the third piece of federal legislation this month addressing the COVID-19 crisis. All indications are that this legislation will be passed by the Senate shortly. Speaker Nancy Pelosi has publicly stated that the House of Representatives will move quickly on the legislation. Passage should be done in the next 2 days and the President has already stated he is signing this into law immediately.
Although the final legislation may be tweaked, here are some key provisions:
Small Business Interruption Loans
- Funded at $300 billion
- Available to businesses with fewer than 500 employees that were in operation on March 1, 2020, and had employees for whom the borrower paid salaries and payroll taxes.
- Maximum loan amount: $10,000,000 or four times the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the 1-year period before the date on which the loan is made – whichever is less.
- Funds may be used for payroll support (including paid sick, medical, or family leave, and continuation of group health care benefits during those periods of leave), employee salaries, mortgage payments, rent payments, utilities, and any other debt obligations incurred before the covered period.
- Loans would be managed through private lenders.
- Lenders would be required to provide complete payment deferment relief for impacted borrowers for a period of not more than 1 year.
The draft of The Cares Act includes provides “loan forgiveness” for payroll costs incurred between March 1, 2020, and June 30, 2020, (the “covered period”) if certain conditions are met.
(A) compensation of an individual employee in excess of $33,333 during the covered period;
(B) qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (FFCRA”), which is the second federal stimulus law); or
(C) qualified family leave wages for which a credit is allowed under section 7003 of FFCRA.
- The amount of loan forgiveness must not exceed the sum of the total payroll costs incurred during the covered period and the amount of payments made during the covered period on debt obligations that were incurred before the covered period.
- The amount of loan forgiveness will be reduced based on a reduction in the number of employees, taking into account the number of full-time employees employed during the covered period.
- There will also be a reduction related to compensation. The amount of loan forgiveness will be reduced by the amount of any reduction in excess of 25% of compensation in the most recent full quarter in which the employee was paid in compensation during the covered period of any employee who was compensated either
(A) less than $33,333 during the covered period; or
(B) not more than $100,000 on annualized basis during 2019.
If you would like to view the draft of The CARES Act, find it HERE.