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Curt Hearn can be reached at or 504.582.8308

On Thursday, April 23, the Small Business Administration (SBA) and United States Department of Treasury released a new question 31 and related answer as a supplement to the Paycheck Protection Program (PPP) Loan Frequently Asked Questions (FAQs), which they previously published and have periodically updated since the program began. The recent addition, which is quoted below, appears to us to demonstrate the effects that public pressure is having on the SBA following the inability of a number of small businesses to participate in the first round of PPP funding:
Continue Reading Updated FAQ Issued Regarding the Paycheck Protection Program and Qualification for Loans

On April 21, 2020, the Senate passed in a pro forma session an “interim” coronavirus relief bill, titled the “Paycheck Protection Program and Health Care Enhancement Act” (the Senate Bill). The Senate Bill would amend the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), enacted March 27, 2020, to (i) increase the amounts authorized for the Paycheck Protection Program (PPP) in accordance with Section 7(a) of the Small Business Act, the economic injury disaster loans, and emergency grants under the CARES Act, and (ii) authorize additional funding for hospital and provider recovery and coronavirus testing. Notwithstanding complaints that have been lodged by various constituencies about the structure, administration, and fairness of the PPP that was implemented by the CARES Act, the new legislation would not modify the PPP’s lending program, choosing instead to appropriate additional funding so that more small businesses are covered. The following is a summary of the key provisions of the Senate Bill.
Continue Reading Senate Passes Paycheck Protection Program and Health Care Enhancement Act

The Federal Reserve Board’s (Federal Reserve) open comment period on its proposed Main Street Lending Program (MSLP) ended on April 16, 2020. Hundreds of comments raising concerns and recommendations about the MSLP were submitted by companies, lenders, and industry groups, as well as by members of Congress. A number of the key concerns, which have been echoed by other commenters, were summarized by the US Chamber of Commerce (Chamber) in its comment letter to the Federal Reserve and the US Department of the Treasury. These recommendations include:

  • Increasing the loan term beyond four years.
  • Decreasing the minimum loan size.
  • Modifying employee and revenue thresholds.
  • Including US branches or affiliates of non-US institutions as Eligible Lenders.
  • Clarifying the reasonable efforts an eligible borrower must take to maintain its payroll and retain its employees.
  • Adjusting the current definition of EBITDA based on GAAP.
  • Easing restrictions that prohibit eligible borrowers from paying dividends to shareholders or engaging in stock repurchases.
  • Reconsidering the use of the secured overnight financing rate (SOFR) at the onset of the loan.
  • Expanding eligible loans under the Main Street Expanded Lending Facility beyond those anchored on preexisting term loans.
  • Clarifying the material terms of the participation agreement for the Special Purpose Vehicle.

Continue Reading MSLP Alert: End of Federal Reserve’s Comment Period, and Next Steps


On April 9, 2020, the Department of the Treasury (Treasury) and the Federal Reserve Board (Federal Reserve) announced several additional initiatives aimed at promoting maximum employment and stabilizing the economy, including the Main Street Lending Program. The Main Street Lending Program, which implements separate provisions of the CARES Act authorizing the establishment of an emergency loan program for midsize businesses and of a main street lending program, establishes new loan facilities for small and midsize businesses with up to 10,000 employees or with revenues less than $2.5 billion. The Federal Reserve announcement, which provides preliminary details and term sheets regarding the Main Street Lending Program, can be found here. As explained further below, these loans can be either new loans or expanded existing loans, with terms of up to four years and with principal and interest payments deferred for one year.

Importantly, the Main Street Lending Program as announced does not specify a minimum number of employees for borrowers — the 500-employee floor stated in the CARES Act for the midsize lending facility has been omitted. In addition, the announcement expressly states that companies that borrow from the Small Business Administration’s Paycheck Protection Program (PPP) may also participate in the Main Street Lending Program.Continue Reading Treasury and Federal Reserve Announce Details of $600 Billion Main Street Lending Program for Small and Midsize Businesses

The Department of the Treasury is moving with unusual speed to issue guidance on several new programs in the CARES Act that are designed to support the business community. Within the past few hours, guidance and application forms have been released by Treasury on the Paycheck Protection Program, Payroll Support to Air Carriers and Contractors,

An important negotiating point between buyers and sellers of a business is whether to include within the acquisition agreement a “Material Adverse Change” (MAC) or “Material Adverse Effect” (MAE) related closing condition. For simplicity’s sake, we will use the term MAC to refer to both MAC and MAE.

Use of MAC Clauses

MAC clauses permit the buyer to void the transaction if, prior to the closing date, a material adverse development occurs that affects (or is reasonably likely to affect) the balance sheet, the results of operations or the business of the target company. Even in transactions in which the buyer does not prevail in including a standalone MAC closing condition, the transaction agreement frequently includes an absence of changes (or “no MAC”) representation that is brought down to the closing, along with a general representation and warranty “bring-down” closing condition that may be qualified by a MAC standard.

Pandemics and the MAC Clause

The coronavirus (COVID-19) pandemic has caused many companies and industries to experience widespread and severe disruptions to their operations, with some businesses facing material risks to their longer-term prospects. Given these developments, this is an opportune time to review MAC clauses for transactions that have signed but not yet closed, and to give special consideration to the risks presented by pandemics in negotiating and drafting MAC clauses for deals to come. In particular, this pandemic shows in high relief the danger of the carve-outs that are often included in the definition of a MAC. There is no doubt that this pandemic has had, and is continuing to have, an unprecedented material adverse effect on many businesses that no one could have anticipated, and would normally meet all the necessary elements of a MAC under Delaware case law. However, the effect of the carve-outs used in many acquisition agreements is to leave the buyer bearing the brunt of the risks associated with the pandemic.Continue Reading Navigating the Pandemonium Raised by the Pandemic: Risk Mitigation in M&A