Small Business Loan Relief From CARES Act
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For many small businesses across the country, the COVID-19 pandemic has been devastating. In response to the crisis, the Coronavirus Aid, Relief, and Economic Security (CARES) Act includes several provisions offering relief to small businesses. Most important, the law appropriates $349 billion for the new Paycheck Protection Program (“PPP”), which provides federally backed loans up to a maximum of $10 million to qualifying small businesses and nonprofits to assist with payroll and certain other operating costs. The CARES Act also lifts some restrictions for other SBA programs, such as 7(a) and Emergency Injury Disaster Loans, and makes it easier and more attractive for lenders to participate. And finally, the CARES Act includes provisions delaying, deferring, or outright forgiving a variety of loans to small businesses.
In this Advisory, we set forth many key questions that may arise for borrowers seeking small business relief under the CARES Act and lenders interested in providing it. Several of the CARES Act provisions regarding small business loans direct the SBA or the Treasury Department to draft implementing regulations or procedures. Those implementing regulations and procedures might limit, qualify, or otherwise modify existing SBA regulations and guidance as described in this Advisory, such as the affiliation rules. Arnold & Porter will monitor those developments and update this Advisory as they occur.
*Jamie Lee contributed to this Advisory. Ms. Lee is a graduate of the University of Chicago Law School and is employed at Arnold & Porter's Washington, DC. office. Ms. Lee is not admitted to the practice of law in Washington, DC.
*Paul Nabhan contributed to this Advisory. Mr. Nabhan is a graduate of the Georgetown University Law Center and is employed at Arnold & Porter's New York office. Mr. Nabhan is not admitted to the practice of law in New York.
*Joel Thompson contributed to this Advisory. Mr. Thompson is a graduate of the University of Kansas School of Law and is employed at Arnold & Porter's Washington, DC office. Mr. Thompson is not admitted to the practice of law in Washington, DC.
© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.