Today, the House passed H.R. 748, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the third Congressional relief package mitigating impact to industries and individuals due to the coronavirus. This bill provides direct relief to many Americans through checks. The CARES Act funds new loans and other financial relief programs administered by the Small Business Administration (SBA), Department of Treasury, and other agencies. It does not provide targeted assistance for specific industries.
While our $182 million relief request for DP3 providers was not explicitly granted, the bill still provides funds that all movers should be eligible to apply for. Below are some highlights:
- H.R. 748 would give the SBA $349 billion to fully guarantee loans under the Agency’s new Paycheck Protection Program. This new option would allow small businesses to seek loans through the SBA’s 7(a) loan program. Loans would be available during the covered period for any company with 500 or fewer employees, or a number set by the SBA for that industry.
- Eligible SBA loan recipients could receive loans for as much as $10 million, or 250% of their average monthly payroll costs, instead of the standard $5 million. Recipients could use the loans to cover eligible payroll costs, including salaries, commissions, regular paid leave, and healthcare benefits, – as well as mortgage interest and utility payments. Applicants will need to make a, “good faith certification,” that they’ll use the funds to retain workers, maintain payroll, pay for rent and similar expenses.
- Recipients cannot use the funds to compensate individual employees at an annual rate above $100,000 or pay for emergency sick or family leave under the second coronavirus response package. Recipients of SBA-guaranteed loans under the Paycheck Protection Program could apply for loan forgiveness over eight weeks for eligible payroll costs and mortgage interest, rent and utility payments.
- The measure provides $10 billion to expand the SBA’s disaster loan program from Jan. 31 through Dec. 31 to cover businesses, cooperatives, and employee stock ownership plans with 500 or fewer employees.
- The SBA is now authorized to advance as much as $10,000 to existing and newly eligible disaster loan recipients within three days of receiving their applications. Recipients may use the advance funds to pay sick leave to employees affected by COVID-19, retain employees, address interrupted supply chains, make rent or mortgage payments, and repay debt. The advance funds would not require repayment.
For businesses between 500 and 10,000 employees, H.R. 749 sets up Federal Reserve lending programs providing financing to banks and lenders to make direct loans to eligible entities. Those loans wouldn’t require interest or principal repayments for the first six months. Borrowers would have to certify that they:
- Would use the loan to retain at least 90% of their workforce until Sept. 30.
- Intend to restore at least 90% of their workforce by Feb. 1, 2021, within four months of the end of the coronavirus public health emergency.
- Are U.S.- based.
- Won’t pay dividends or repurchase equities.
- Won’t outsource jobs or relocate them outside the country or abrogate existing collective bargaining agreements for the term of the loan and two subsequent years.
- Would remain neutral on any union organizing efforts during the loan term.
As you may recall, AMSA requested funds specifically for the DOD household goods community. The final bill did include sections targeted at providing relief directly to businesses critical to national security as well as lump appropriations for DOD to prevent, prepare and respond to Coronavirus. The $500 billion to the Treasury Department’s Exchange Stabilization Fund includes $17 billion for businesses critical to national security. While it doesn’t specify which types of companies would meet these criteria, AMSA is hopeful that our $186 million relief request for DP3 providers will be considered eligible. The DOD was directly appropriated over $10 billion of these relief funds, and AMSA is working with US TRANSCOM to ensure that a portion goes to DP3 providers.
We must wait for Congress to pass, and federal agencies to implement, regulations before we know more precise details on how the programs will be administered. We encourage all AMSA members to check the SBA’s website regularly, and we will continue to disseminate information as it becomes available.
Please contact Katie McMichael with any questions or for further clarification.