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On March 31, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced that the SBA and Treasury Department have initiated a “robust” mobilization effort of banks and other lending institutions to provide small businesses with $349 billion in much-needed capital pursuant to the Paycheck Protection Program, established by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, the largest stimulus package in U.S. history, was signed into law by President Trump on March 27, 2020. The Paycheck Protection Program (the “Program”), established by the CARES Act, will provide relief to small businesses in an effort to help them sustain their businesses and keep workers employed.

The Program will provide small business forgivable job retention loans of up to 2.5 times an employer’s average monthly payroll to cover payroll, rent or mortgage payments,and certain other expenses to keep workers employed. According to Secretary Mnuchin, the Program is expected to be up and running by April 3 so that businesses can swiftly take advantage of the funds by going to a participating SBA 7(a) lender, bank, or credit union, applying for a loan, and receiving approval the same day. Approximately 1,800 lenders are already approved to issue the loans, and applications for the emergency loans can begin as early as this week.

Eligible businesses include (1) those that meet the existing SBA definition of “small business concern” and (2) any business concern, nonprofit, veterans organization, or tribal business concern that employs not more than the greater of: (a) 500 employees or (b) if applicable, the number of employees listed in the size standard established by SBA for the industry in which the business operates. The business also must have been in business on February 15, 2020 and have had employees or paid independent contractors on that date. The Program also eases SBA’s traditionally stringent affiliation rules with three new affiliation waivers for: (i) businesses assigned a NAICS code beginning with 72 (Accommodation and Food Services); (ii) businesses operating a franchise within the SBA Franchise Directory; and (iii) businesses that receive financial assistance from a Small Business Investment Company. Moreover, businesses assigned a NAIC code beginning with 72 at the time of disbursal may still qualify if they have less than 500 employees at each physical location.

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