Coronavirus - Government measures in key jurisdictions - Flipbook - Page 86
United States of America
Contributor: Nixon Peabody
1
Loans and
financial
support
•
The U.S. Federal government has embarked on several initiatives to support
businesses. The two primary programs were included in the CARES Act, which was
signed into law on March 27, 2020.
•
The Paycheck Protection Program (PPP) incentivises employers to continue to
employing workers and paying employee benefits. PPP is administered by the
Small Business Administration (SBA) and offers employers unsecured loans at a
nominal interest rate, with a streamlined closing process. The program is available
to companies with less than 500 U.S.-based full-time equivalent employees. Foreign
ownership is not a bar to participation. PPP loans are available for up to the lesser of
(a) US$10 million and (b) 2.5 times average monthly payroll. PPP loans can be forgiven
in whole or in part, to the extent that recipients use them for qualified purposes,
namely, wages, salary, benefits, rent, mortgage interest and utilities. As of mid-April
2020, the initial US$349 billion allocated for PPP loans had been claimed in full,
however Congress is expected to offer additional funding in the near future.
•
For more details, please refer to our client alert here.
•
The Main Street Lending Program (MSLP), facilitates low interest lending to small
and medium-size businesses, including those with over 500 employees. Up to $600
billion of MSLP loans will be available.
•
For more details, please refer to our client alert here.
•
The U.S. Federal government created the Federal Pandemic Unemployment
Compensation program, which provides an additional $600 weekly in special
unemployment compensation for individuals receiving as little as $1 in standard
unemployment benefits. The law also extends the maximum duration of benefits by 13
weeks, which means that in most states, employees who have lost their jobs, or been
placed on furlough, will be able to collect for up to 39 weeks. The new rules also include
compensation for individuals who are not traditionally eligible for unemployment
benefits, including independent contractors.
•
The Families First Coronavirus Response Act created mandatory employer-paid leave
related to COVID-19.
•
For more details, please refer to our client alert here.
•
The CARES Act modifies the Small Business Reorganization Act (SBRA) and greatly
expands the restructuring options available to businesses with less than US$7.5
million in debt through March 27, 2021. It is effective immediately. Previously, only
businesses with up to $2.7 million in debt could use the SBRA’s expedited procedures.
Small business debtors have traditionally been wary of a reorganization process
under Chapter 11 of the Bankruptcy Act (which provides for reorganizations), despite
its well-acknowledged benefits, due primarily to the potential cost and disruption it
often causes. For those businesses that qualify, the SBRA is intended to alleviate those
concerns and to make small business bankruptcies proceed under a faster timeline
and at reduced cost.
•
For more details, please refer to our client alert here.
Has the
government put
in place any new
bank funding
schemes?
2
3
86
Employment
What financial
support is the
government
providing to
businesses and
to individuals
on employment
issues?
Insolvency
David Kaufman | dkaufman@nixonpeabody.com | +1 415 244 2224
David Brown | drbrown@nixonpeabody.com | +1 312 977 4426
Has the
government made
any changes
to insolvency
legislation?
Government measures in key jurisdictions
4
5
6
7