Government measures in key jurisdictions 2nd edition final pages - Flipbook - Page 107
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) incentivizes employers to continue to employ
workers and pay 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 full-time equivalent employees. Foreign ownership is not a bar to
participation, but as of May 5, 2020, foreign affiliates will be included in calculating
loan eligibility and funds may not be used to support foreign workers or operations.
Also, borrowers receiving more than $2 million will need to be able to reasonably
articulate a need for the PPP funds. 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. While the original
tranche of funds was exhausted quickly, on April 21, 2020, interim emergency relief
legislation was passed to increase funding to the PPP by an additional $310 billion.
•
Companies that accept PPP funds can’t take advantage of some of the tax benefits
rolled out by the U.S. government (see below). While struggling businesses have
grappled with the complex qualification and application rules of the PPP, those
businesses should also consider the Employee Retention Credit (ERC). In many
instances, the ERC will be a better choice.
•
For more details, please refer to our client alerts here & 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.
Has the
government put
in place any new
bank funding
schemes?
2
Employment
What financial
support is the
government
providing to
businesses and
to individuals
on employment
issues?
David Kaufman | dkaufman@nixonpeabody.com | +1 415 244 2224
David Brown | drbrown@nixonpeabody.com | +1 312 977 4426
Government measures in key jurisdictions
107