The COVID-19 relief package enacted on December 27, 2020, the Consolidated Appropriations Act, 2021, appropriated $15 billion to fund the Shuttered Venue Operators Grant Program (SVP). The Small Business Administration (SBA) will disburse these funds as grants to qualifying live theatre operators or promoters, theatrical producers, live performing arts organizations, museums, motion picture theatre operators, and talent representatives (Venues). A venue may use the grant proceeds to cover eligible expenses incurred between March 1, 2020, and December 31, 2021. The SBA has not yet begun accepting applications for the SVP, but it has issued several FAQs setting forth more details regarding the program. This memorandum summarizes the SVP’s current guidance, including eligible and ineligible Venues, grant amounts and allowed uses, and application requirements.
Continue Reading Helping the Show Go On: Shuttered Venue Operators Grants
“Stimulus Bill Provides Expanded Opportunity for Employers to Take Tax Credit for Retaining Employees”
The CARES Act passed in March 2020 created an “employee retention tax credit,” which entitled eligible employers to a refundable tax credit for wages paid to employees during periods that the employer’s business was subject to a suspension, a shutdown, or a significant decline in revenues. The tax credit was not widely used by employers with fewer than 500 employees, primarily due to the fact that employers with Paycheck Protection Program (PPP) loans could not take advantage of the credit. On December 27, 2020, the Consolidated Appropriations Act (the CAA) was signed into law. The CAA significantly expanded the usability of the employee retention tax credit by allowing employers with PPP loans to take advantage of the credit. Further, the CAA increased the amount of the tax credit available. In tandem, these changes make the credit an attractive opportunity for employers during 2021 as well as easier to obtain for qualifying wages paid during 2020.
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Main Street Lending Program Now Open for Lender Registration
On June 15, 2020, the Federal Reserve Bank of Boston (FRBB) announced that the Main Street Lending Program (MSLP) is now open for lender registration and encouraged eligible lenders to start making MSLP loans “immediately.” The MSLP is not yet fully operational, as the Federal Reserve’s special purpose vehicle (Main Street SPV) is not ready to purchase participations from lenders under the program; however, it is anticipated that the FRBB will open its loan intake portal in the coming days.
Accordingly, eligible lenders that propose to make loans under one or more of the MSLP facilities (the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF)) should now register for the MSLP in order to avoid delay in their participation in loans to the Main Street SPV once the loan intake portal opens. A link to the FRBB’s lender registration page is here.
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Enactment of Paycheck Protection Flexibility Act of 2020
On June 5, President Trump signed the Paycheck Protection Program Flexibility Act of 2020 (the Flexibility Act). The act revised, in certain important respects, elements of the Paycheck Protection Program (PPP) that had appeared in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as supplemented by a series of interim final rules and FAQs published by the Small Business Administration (SBA). Below is a summary of the changes.
Continue Reading Enactment of Paycheck Protection Flexibility Act of 2020
Main Street Lending Program — Revised June 8 Term Sheets
On June 8, 2020, the Federal Reserve Board (Federal Reserve or FRB) announced a number of changes to the terms and conditions for three Main Street Lending Program (MSLP) facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). The Federal Reserve anticipates lender registration to be open in the coming days.
In response to feedback received from industry groups and others, the Federal Reserve made the following changes to the MSLP, which will make the program available to more small and medium-sized businesses:
- Reducing the minimum loan size for the MSNLF and MSPLF from $500,000 to $250,000
- Increasing the maximum loan size for all facilities
- Increasing the term of each loan option from four to five years
- Deferring the initial principal payments for two years, rather than one
- Reducing the lenders’ risk retention in the MSPLF from 15% to 5%; as a result, the MSLP special purpose vehicle will purchase a 95% participation in qualifying loans under all three facilities
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Main Street Lending Program — Federal Reserve Bank of Boston Issues Required Forms and Revised Guidance
On May 27, 2020, the Federal Reserve Bank of Boston (FRBB) released the legal forms and agreements for eligible borrowers and eligible lenders to participate in the Main Street Lending Program (MSLP). The FRBB also published updated Frequently Asked Questions (FAQs), which include numerous new questions and answers regarding eligibility, loan terms and conditions, borrower certifications and covenants, regulatory requirements and reporting, and other issues.
On April 30, 2020, the Federal Reserve Board (Federal Reserve) had issued the terms and conditions for three MSLP facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). Copies of all documents can be found on the FRBB’s Main Street Lending Program Forms and Agreements webpage.
In the May 27 release, the term sheets for the three MSLP facilities were not amended from the forms released on April 30, and the definitions of “Eligible Borrower” and “Eligible Lender” remain unchanged. An overview and summary of the previously issued term sheets, including eligible borrower and eligible lender requirements, can be found here. A list of covenants and commitments required to be made by eligible borrowers and lenders — including compliance with the CARES Act’s compensation, stock repurchase, and capital distribution restrictions — is also detailed.
Although the MSLP has not yet been launched, the documents, checklists, and revised guidance issued on May 27 appear to be final, subject to future Federal Reserve interpretation and refinement. Accordingly, eligible borrowers and eligible lenders should review the available guidance and documentation, and address potential issues surrounding the facilities’ terms and conditions with their counsel now. We expect that the Federal Reserve and FRBB will announce the program start date in the coming days.
SBA Offers Further Guidance — and Certainty — Regarding Good Faith Certification of PPP Loan; Further Extends Safe Harbor Repayment Date
In a significant, and overall welcome, development, on May 13, 2020, the Small Business Administration (SBA) issued additional guidance regarding the required certification by applicants for a Paycheck Protection Program (PPP) loan that the “current economic uncertainty makes th[e] loan request necessary to support the ongoing operations of the Applicant.”
Borrowers applying for a PPP loan are required to make the certification in good faith, and the SBA had previously issued guidance stating that all PPP loans of more than $2 million would be subject to audit to determine whether the borrower had an adequate basis for making the certification. This prior guidance also established that any borrower that repaid the PPP loan in full on or prior to May 7, 2020 (subsequently extended to May 14, 2020, and now further extended to May 18, 2020), would be deemed to have made the certification in good faith (see FAQ 31, FAQ 37, Interim Final Rule on Extension of Limited Safe Harbor with Respect to Certification Concerning Need for PPP Loan Requested dated May 8, 2020, and FAQ 47).
Employers That Repay PPP Funds by May 14 Are Eligible for Employee Retention Tax Credit
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides for, among other things, an “employee retention tax credit” for employers that are forced to suspend operations or experience a financial downturn. The CARES Act disqualified employers that received Paycheck Protection Program (PPP) loans from taking the employee retention tax credit. Some employers that received PPP loans are now contemplating repaying the loans based on recently released guidance clarifying the scope of employers that are eligible for the PPP. The guidance allows employers that received PPP funds to repay the funds by May 14 without penalty.
Federal Reserve Announces Revised Terms of Main Street Lending Program
On April 30, 2020, the Federal Reserve Board (Federal Reserve) issued revised terms and conditions of its Main Street Lending Program (MSLP), which is expected to make approximately $600 billion in loans available for small and midsized businesses. The Federal Reserve’s announcement, including revised term sheets for the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF); a new term sheet for a third loan facility, the Main Street Priority Loan Facility (MSPLF); and an extensive set of frequently asked questions (FAQs) can be found here. Brief summaries of each of the facilities are set forth below; a more comprehensive discussion of the final program, including the FAQs, will be provided in a subsequent alert.
Note that the MSLP is not yet operational; the Federal Reserve is expected to announce the start date in the near future. Pending the program’s official launch, prospective borrowers are encouraged to contact their existing banks to confirm that they are Eligible Borrowers and that the banks will participate as lenders.
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Latest Coronavirus Relief Bill Signed Into Law Today
Today, the Paycheck Protection Program and Healthcare Enhancement Act (the Enhancement Act) was signed into law. The Enhancement Act increases amounts authorized and appropriated under the Coronavirus Aid, Relief, and Economic Security Act (Public Law 116–136) (the CARES Act).
The Enhancement Act provides an additional $310 billion for the Paycheck Protection Program (PPP) under section