covid-19 federal relief package business loans & … · • $349 billion in loans for small...

COVID-19 FEDERAL RELIEF PACKAGE BUSINESS LOANS & RESOURCES

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April 7, 2020Informed on Reform Web Meeting Series

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Today’s agenda

2This information is not a solicitation of insurance. It is for informational and educational purposes only. © 2020 Cigna

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CARES Act overview

Congressional comments

Economic Stabilization Loans

The Paycheck Protection Program

SBA Economic Injury Disaster Loans

and resources

“Ask the experts” Q&A

Kristin Julason DamatoVice President, Global Policy &Federal Government Affairs, Cigna

Ansley Rhyne & Caleb OrrStaff of Sen. Marco Rubio, Chair of Small Business and Entrepreneurship

Craig BurkardtPartner, Barnes and Thornburg, LLP

Bill HulseDirector, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce

FEATURED SPEAKERS

An overview

Kristin Julason Damato

THE CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY (CARES) ACT

3Confidential, unpublished property of Cigna. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. © 2020 Cigna

Coronavirus Aid, Relief and Economic Security (CARES) Act

• Health care-related provisions

– Aid to health care institutions

– COVID-19 vaccine and testing coverage

– Telehealth expanded services and HDHP coverage

– Over-the-Counter expanded under HSAs and FSAs

CARES Act, COVID-19 Relief Package


Provides federal funding resources for small and large businesses

• Economic/financial provisions

– Individual stimulus payments

– Treasury loans to severely stressed sectors/ industries

– Small Business Interruption loans

– Paycheck Protection Program loans


Ansley Rhyne & Caleb Orr

Committee Staff of Sen. Marco Rubio, Chair of the

Small Business and Entrepreneurship Senate Committee

CONGRESSIONAL COMMENTS


Craig Burkhardt

Partner, Barnes and Thornburg, LLP

Washington, D.C.

ECONOMIC STABILIZATION LOANS


Economic Stability Loan/Loan Guarantee Program and eligibility


Economic Stability Loan/

Loan Guarantee Program

• Treasury allocated $500 billion and

authority to determine Terms

• $46 billion carved out for Airlines, National

Defense

• No principal or interest for first six months

• Treasury/Federal Reserve Term Sheet to

be issued on rolling basis

• Fast turn-around expected

• Link to documents:

https://home.treasury.gov/coronavirus

Eligibility

• States and Municipalities

• Businesses and NFPs with

500 -10,000 employees

• Domiciled in the U.S., with

significant operations and

employees in the U.S.

• Recipient is not in bankruptcy


“Main Street” loans and conditions


Use of loans

• Loan necessary for ongoing operations of the recipient

• Retain at least 90 percent of the recipient's workforce until Sept. 30, 2020

• Many requests for flexibility on rehire and retention terms have been received by Treasury


“Main Street” loans and conditions, continued


Conditions

• Loans will be secured

• Cannot outsource or offshore jobs for the term of the loan and two years after completing

repayment

• Cannot abrogate existing collective bargaining agreements during the term of the loan

and two years after completing repayment

• Must remain neutral in any union organizing effort for the term of the loan

• Neither business nor any affiliate may engage in stock buy-backs unless it is under a

preexisting contractual obligation to do so, and

• No common stock dividends or capital distributions

• Limits on pay increases and severance payouts for $425,000+ employees

• Salary caps of $3 million+ employees


Additional matters and what to do


What to do

• Determine if the loan program is a

rational solution

• Gather financial information based

on airline application example

• Prepare for rapid application

preparation and submission

Additional matters

• Pre-existing loans or credit facilities

• Airline-related application was very

streamlined

• Expect to bargain with hired banks

or investment bankers who will

advise Treasury


Bill HulseDirector, Center for Capital Markets Competitiveness U.S. Chamber of Commerce

SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTIONPROGRAM LOANS


Paycheck Protection Program – overview


• $349 Billion in loans for small business (generally less than 500 employees),

501(c)(3)s, self-employed, sole proprietors, and independent contractors

• Loans by private lenders that are guaranteed by the Small Business

Administration (SBA)

• Loans equal to the lesser of 2 ½ months of average payroll or $10 million

• Loans are eligible for forgiveness if certain criteria are met (e.g. maintaining payroll)

Small Business PolicyU.S. Chamber of Commerce

Small businesses, self-employed, independent contractors, non-profits


Paycheck Protection Program – Who is eligible to borrow?


• 500 or fewer employees in the U.S., or a business that meets applicable SBA

employee-based size standards for that industry, subject to the SBA’s

affiliation rules

• A tax-exempt nonprofit organization – 501(c)(3), a tax –exemption veterans

organization – 501(c)(19), or a Tribal business concern – 31(b)(2)(c) with

fewer than 500 employees

• In operation on February 15, 2020, and either had employees for whom you

paid salaries and payroll taxes, or paid independent contractors

• Sole proprietors, independent contractors, and certain self-employed

individuals are also eligible




Paycheck Protection Program – How can it be used?


75% or more of the funds must be used for payroll costs as defined by the CARES Act

• Costs related to continuation of group health care benefits during periods of paid

sick, medical, or family leave, and insurance premiums;

• Mortgage interest payments (but not prepayments or principal payments);

• Rent payments;

• Utility payments;

• Interest payments on any other debt obligations incurred before February 15, 2020;

and/or

• Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020




Paycheck Protection Program – What are the loan terms?


• Loan Size

• Loan Terms

• Loan Forgiveness Rules




Paycheck Protection Program – Who are the eligible lenders?


• Current SBA 7(a) lenders

• Approvals underway for other lenders

What we are hearing from lenders?

• Overwhelmed by influx of applications

• Apply with your existing lender

• Not all lenders are participating in the Paycheck Protection Program




Paycheck Protection Program – What’s next?


• Funds are available until June 30, 2020, or until funds run out

• Initial reports suggest that the PPP will exhaust its funding sooner than expected

• Additional funding from Congress … ?

• Federal Reserve may create a liquidity program to make it easier for banks to lend



The experts say you should apply ASAP


• $7 billion in additional funding provided

under “Phase 2” legislation

• SBA Disaster Loans with a 60-year history

• Small businesses & non-profits with 500

or fewer employees

• ESOPS, Self-Employed & Independent Contractors required to have been

operational on January 31, 2020

• Up to $2 million working capital loan up to 30-year term. 3.75% business; 2.75%

non-profit

• Payments and interest deferred for a year

• Emergency EIDL Grant up to $10,000

• Emergency EIDL Grant not tied to loan acceptance

• EIDLs can be refinanced into a PPP loan

• Streamlined EIDL application www.SBA.gov/disaster

SBA Economic Injury Disaster Loans





Keep up to date

www.uschamber.com/co

Download our guide:

www.uschamber.com/sbloans

Learn more about the Paycheck Protection Program



http://www.uschamber.com/co

http://www.uschamber.com/sbloans

Wrap up

ASK THE EXPERTS Q&A



InformedonReform.com

THANK YOU


This information is not legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information and educational purposes

only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have. Cigna assumes no responsibility for any

circumstances arising out of the use, misuse, interpretation, or application of any information supplied in this publication.

All Cigna products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company.

The Cigna name, logo, and other Cigna marks are owned by Cigna Intellectual Property, Inc.

HCR04072020 04/20 © 2020 Cigna. Some content provided under license.

covid-19 federal relief package business loans & … · • $349 billion in loans for small...

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