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House Passes Paycheck Protection Program (PPP) Bill Giving Borrowers More Time To Rehire And Spend Loan Proceeds


This past Thursday (May 28) the House passed a bill (Paycheck Protection Flexibility Act, H.R. 7010) 417-1 alleviating the PPP fiscal deadlines looming in June mentioned in our previous blog post. The bill: -Gives PPP borrowers until December 31 (currently the deadline is June 30) to rehire to pre-pandemic employment levels if they want full loan forgiveness. -Allows PPP borrowers to accumulate 24 weeks (up from the current 8 weeks) of eligible expenses (payroll, rent, and utilities) for forgiveness. -Lowers the minimum amount of forgiveness that must be payroll expenses from 75% to 60%. The Bill does not add appropriations to the program (currently $670 billion with approximately $510 billion approved to date).

House Passes Paycheck Protection Program (PPP) Bill Giving Borrowers More Time To Rehire And Spend Loan Proceeds2020-05-30T13:46:10+00:00

Are PPP Recipients Heading Over The Cliff?


PPP coverage expires in June and $600 UI payments end in July Congress scrambles to bridge the gap. The House of Representatives will vote next week on a bill to modify the PPP stimulus program. The bill would increase the eligible expense period from 8 to 24 weeks and remove the current requirement that forgiveness must be at least 75 per cent payroll expenses. Some Republicans are reportedly considering a proposal to provide unemployed beneficiaries of the current $600/week unemployment insurance top-up payments a lump sum payment after July 31 in lieu of extending the top-up.

Are PPP Recipients Heading Over The Cliff?2020-05-21T15:40:59+00:00

Pelosi’s $3 Trillion COVID Relief Plan


A summary of the major provisions below: $1 Trillion funding for state and local governments facing budget shortfalls. Republicans argue funding will mostly help blue states who were already in economic trouble before the virus. More Stimulus Checks. $1,200 for individuals making less than $75,000/year and same amount for children. Plan also provides checks to people not included in the last round: adult dependents and people without a Social Security number (i.e., those in the country illegally). These rebate checks cost $290 billion in the CARES Act. Extend enhanced unemployment benefits until January, 2021. Plan extends deadline (currently set to expire at the end of July) for the additional $600 per week of Federal benefits and expands eligibility for unemployment insurance (UI). Expanded UI cost ~$260 billion in the CARES Act. Also included, an increase in funding for food stamps. “Heroes’ Fund”. $200 billion in funding for “essential workers” to receive hazard pay in the [...]

Pelosi’s $3 Trillion COVID Relief Plan2020-05-14T15:35:54+00:00



This past week the Federal Reserve released details on its Main Street Lending Facilities (“MLSF”) which both expanded and restricted MLSF’s original terms announced April 9.  Here are highlights: Fed added a “Priority” facility to the “New” and “Expanded” facilities. Priority loans will have larger lender risk retention (15% versus 5% under New and Expanded Facilities) and will have a balloon payment structure with 70% of the payment due in the 4th, final year (versus equal payments in years 2-4 under the “New” option). “Expanded” option also includes a balloon structure. All three types of facilities exempt payments in the first year. MSLF’s minimum loan size is now lowered to $500,000 under a “Priority” facility but raised to $10MM for “Expanded facility (which is now maxed out at $200MM versus the original $150MM or 35% of outstanding debt---an increase over the original 30%). Expanded eligibility for companies with (i) less than 15,000 employees from the [...]


Fed Announces Details on Main Street Lending Program


Yesterday the Fed announced details on the much anticipated “Main Street Lending program” which is intended to provide up to $600B in loans to medium-sized companies. Below is a quick summary of some of the key points: Interest Rates. Loans will be adjustable rate priced at the Secured Overnight Financing Rateor “SOFR” (the Fed’s alternative to Libor) plus 250 to 400 basis points and a 100 basis point origination/facility fee. Loan Term. Four-year terms with no principal or interest due the first year. Eligible Borrowers. Eligible borrowers include companies with up to 10,000 employees or annual revenues below $2.5B. Smaller companies with less than 500 employees can double up by using both the Main Street Program and the Small Business Administration PPP loan program. Limits. Borrowers cannot exceed four times 2019 EBITDA on a new loan. Restrictions. Conditionality is based on the “direct loans” requirement of the stimulus law which means no buybacks, no dividends [...]

Fed Announces Details on Main Street Lending Program2020-04-12T17:34:36+00:00

Fed promises to deliver a Main Street Lending Program for Midsize Companies to complement Small Business Administration’s forgivable loan programs


While many small businesses (including a number of our clients) are racing to apply for federal government Covid-19 loans administered by the SBA, other business owners who run midsize companies (with between 500 and 10,000 employees and $10 million to $2 billion in revenue) too large for the SBA programs are still waiting for details on lending programs that will work for them. Bridge financing to help midsize companies get through the virus shutdown is essential to mitigate the loss of jobs and number of business failures. The Federal Reserve has already announced a number of programs (click here).  However, the Fed has not yet released details about the “Main Street Lending Program”, which will be aimed at midsize companies. The Main Street Lending Program is expected receive at least $100 billion in initial funding and could result in as much as $1 trillion in new loans for midsize companies at interest rates of 2 percent to 2.5 percent with a five-year repayment window. However, [...]

Fed promises to deliver a Main Street Lending Program for Midsize Companies to complement Small Business Administration’s forgivable loan programs2020-04-08T16:39:42+00:00

Lack of clarity in PPP Program is slowing uptake and it may be too late for many small businesses


Today Senator Mitch McConnell called for $200 billion more in resources for SBA-administered Paycheck Protection Program (“PPP”). PPP provides fully-guaranteed non-recourse loans to small businesses with 500 or fewer employees. A significant portion of the loans may be forgiven if borrowers maintain payroll. The PPP program is very broadly written and excludes the SBA’s normal gross revenue eligibility requirements allowing wealthier small firms to participate.  PPP is on a first come first serve basis without strong criteria for whether applicants have suffered in the current environment. However, PPP currently lacks clear guidance because the SBA appears to be overwhelmed. That has made many banks reluctant to ramp up for the disbursement of loans under the program. Some banks are hesitant to engage the program at all, while others are only processing applications from existing customers with whom they are more confident in underwriting. This is bad news for many small businesses since they typically have [...]

Lack of clarity in PPP Program is slowing uptake and it may be too late for many small businesses2020-04-07T21:22:30+00:00
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