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Small Business Programs
With the passage of the federal stimulus package, known as the CARES Act, there are several programs available to small businesses in the wake of the Coronavirus crisis. On this page, you will find information and resources for building owners and managers to help navigate the various provisions available, including:
The Paycheck Protection Program provides lending and tax support to small businesses. Additionally, the Federal Reserve announced an additional $2.3 trillion in loans to support the economy. This new package of relief includes enhanced lending support for small and mid-sized businesses through the Main Street Lending Program in addition to the expansion of the Term Asset-Backed Securities Loan Facility (TALF). We will continue to monitor information about these new economic packages.
For details on each of these provisions, download REBNY Resources: An Overview of the Federal Stimulus for the Real Estate Industry During the Coronavirus (COVID-19) Crisis or read the CARES Act here.
The United States Senate and House of Representatives approved, and the President signed, the $484 billion Federal Stimulus Phase 3.5, which includes additional funding for the Paycheck Protection Program (PPP). The PPP provides lending support to small businesses to cover payroll and certain expenses during the Coronavirus (COVID-19) crisis. The new appropriation will provide an additional $310 billion for small business loans, bringing the total allocation for the program to $659 billion.
To help those considering applying for these loans, read the U.S. Department of the Treasury's frequently asked questions document as well as clarification on the program’s affiliation rules.
NEW PPP Loan Forgiveness Applications – SBA has released a revised 5-page full loan forgiveness application to streamline the previous 11-page application in a continuous effort to make it easier for businesses to access and administer their PPP funds. In addition, the 3-page “EZ” version of the loan forgiveness application is also available for borrowers who:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%
EIDL Application Reopened – The EIDL application portal is now reopened to accept new applications from eligible businesses and non-profits.
For more information on the Paycheck Protection Program and how to apply, please View the Treasury Dept's PPP Overview.
Paycheck Protection Program Flexibility Act
Congress passed and the President signed the Paycheck Protection Program Flexibility Act (PPPFA), which provides greater flexibility for recipients of Paycheck Protection Program loans who continue to be affected by the Coronavirus (COVID-19) crisis.
For New Yorkers in particular, COVID-19 will continue to greatly inhibit business as usual. As a result, many small businesses seeking forgiveness on their PPP loan, for example, were required to make decisions that often went against their best interests in order to meet SBA requirements. Through the PPPFA, sensible changes have been made to better accommodate the current and future needs of small business borrowers.
Learn about the PPPFA & the changes it makes to the PPP in REBNY Resources: Overview of The Paycheck Protection Program Flexibility Act.
The Main Street New Loan Facility is intended to facilitate lending to small and medium-sized businesses by eligible lenders to eligible borrowers.
Eligible borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Each eligible borrower must be a business that is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States. Eligible borrowers that participate in the Facility may not also participate in the Main Street Expanded Loan Facility (MSELF) or the Primary Market Corporate Credit Facility.
Loan amounts will be no less than $1 million and no more than the lesser of (i) $25 million or (ii) an amount that, when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”).
- The eligible borrower must commit to refrain from using the proceeds of the eligible loan to repay other loan balances. The eligible borrower must commit to refrain from repaying other debt of equal or lower priority, with the exception of mandatory principal payments, unless the eligible borrower has first repaid the eligible loan in full.
- The eligible borrower must attest that it requires financing due to the exigent circumstances presented by the Coronavirus disease 2019 (“COVID-19”) pandemic, and that, using the proceeds of the eligible loan, it will make reasonable efforts to maintain its payroll and retain its employees during the term of the eligible loan.
- The eligible borrower must attest that it meets the EBITDA leverage condition stated above specifying required features of eligible loans.
- The eligible borrower must attest that it will follow compensation, stock repurchase, and capital distribution restrictions that apply to direct loan programs under section 4003(c)(3)(A)(ii) of the CARES Act. That is:
Until the date 12 months after the date on which the direct loan is no longer outstanding, not to repurchase an equity security that is listed on a national securities exchange of the eligible business or any parent company of the eligible business while the direct loan is outstanding, except to the extent required under a contractual obligation that is in effect as of the date of enactment of this Act;
Until the date 12 months after the date on which the direct loan is no longer outstanding, not to pay dividends or make other capital distributions with respect to the common stock of the eligible business; and
To comply with the limitations on compensation set forth in section 4004. That is that:
No officer or employee of the eligible business whose total compensation exceeded $425,000 in calendar year 2019 (other than an employee whose compensation is determined through an existing collective bargaining agreement entered into prior to March 1, 2020) will receive from the eligible business total compensation which exceeds, during any 12 consecutive months of such period, the total compensation received by the officer or employee from the eligible business in calendar year 2019; or will receive from the eligible business severance pay or other benefits upon termination of employment with the eligible business which exceeds twice the maximum total compensation received by the officer or employee from the eligible business in calendar year 2019.
No officer or employee of the eligible business whose total compensation exceeded $3,000,000 in calendar year 2019 may receive during any 12 consecutive months of such period total compensation in excess of the sum of $3,000,000; and 50 percent of the excess over $3,000,000 of the total compensation received by the officer or employee from the eligible business in calendar year 2019.
In this section, the term “total compensation” includes salary, bonuses, awards of stock, and other financial benefits provided by an eligible business to an officer or employee of the eligible business.
Loan origination and servicing: An eligible borrower will pay an eligible lender an origination fee of 100 basis points of the principal amount of the eligible loan. The SPV will pay an eligible lender 25 basis points of the principal amount of its participation in the eligible loan per annum for loan servicing.
Termination: The SPV will cease purchasing participations in eligible loans on September 30, 2020, unless the Board and the Treasury Department extend the Facility. The Reserve Bank will continue to fund the SPV after such date until the SPV’s underlying assets mature or are sold.
TALF is intended to help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities (“ABS”) and improving the market conditions for ABS more generally. The TALF will serve as a funding backstop to facilitate the issuance of eligible ABS on or after March 23, 2020.
Eligible borrowers: All U.S. companies that own eligible collateral and maintain an account relationship with a primary dealer are eligible to borrow under the TALF. For the purpose of this document, a U.S. company is defined as a business that is created or organized in the United States or under the laws of the United States and that has significant operations in and a majority of its employees based in the United States.
Eligible collateral: Eligible collateral includes U.S. dollar denominated cash (that is, not synthetic) ABS that have a credit rating in the highest long-term or, in the case of non-mortgage backed ABS, the highest short term investment-grade rating category from at least two eligible nationally recognized statistical rating organizations (“NRSROs”) and do not have a credit rating below the highest investment-grade rating category from an eligible NRSRO. All or substantially all of the credit exposures underlying eligible ABS must have been originated by a U.S. company, and the issuer of eligible collateral must be a U.S. company. With the exception of commercial mortgage-backed securities (“CMBS”), eligible ABS must be issued on or after March 23, 2020. CMBS issued on or after March 23, 2020, will not be eligible.
For CMBS, the underlying credit exposures must be to real property located in the United States or one of its territories.
Eligible collateral must be ABS where the underlying credit exposures are one of the following: 1) Auto loans and leases; 2) Student loans; 3) Credit card receivables (both consumer and corporate); 4) Equipment loans and leases; 5) Floorplan loans; 6) Insurance premium finance loans; 7) Certain small business loans that are guaranteed by the Small Business Administration; 8) Leveraged loans; or 9) Commercial mortgages.
Eligible collateral will not include ABS that bear interest payments that step up or step down to predetermined levels on specific dates. In addition, the underlying credit exposures of eligible collateral must not include exposures that are themselves cash ABS or synthetic ABS.
To be eligible collateral, all or substantially all of the underlying credit exposures must be newly issued, except for legacy CMBS. The feasibility of adding other asset classes to the facility or expanding the scope of existing asset classes will be considered in the future.
Conflicts of interest: Eligible borrowers and issuers of eligible collateral will be subject to the conflicts of interest requirements of section 4019 of the CARES Act.