COVID-19 FEDERAL RELIEF PACKAGE BUSINESS LOANS & RESOURCES
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April 7, 2020Informed on Reform Web Meeting Series
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Offered by Cigna Health and Life Insurance Company or its affiliates
Today’s agenda
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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
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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
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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
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Ansley Rhyne & Caleb Orr
Committee Staff of Sen. Marco Rubio, Chair of the
Small Business and Entrepreneurship Senate Committee
CONGRESSIONAL COMMENTS
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Craig Burkhardt
Partner, Barnes and Thornburg, LLP
Washington, D.C.
ECONOMIC STABILIZATION LOANS
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Economic Stability Loan/Loan Guarantee Program and eligibility
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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
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“Main Street” loans and conditions
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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
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“Main Street” loans and conditions, continued
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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
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Additional matters and what to do
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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
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Bill HulseDirector, Center for Capital Markets Competitiveness U.S. Chamber of Commerce
SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTIONPROGRAM LOANS
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Paycheck Protection Program – overview
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• $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
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Paycheck Protection Program – Who is eligible to borrow?
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• 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
Small Business PolicyU.S. Chamber of Commerce
Small businesses, self-employed, independent contractors, non-profits
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Paycheck Protection Program – How can it be used?
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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
Small Business PolicyU.S. Chamber of Commerce
Small businesses, self-employed, independent contractors, non-profits
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Paycheck Protection Program – What are the loan terms?
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• Loan Size
• Loan Terms
• Loan Forgiveness Rules
Small Business PolicyU.S. Chamber of Commerce
Small businesses, self-employed, independent contractors, non-profits
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Paycheck Protection Program – Who are the eligible lenders?
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• 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
Small Business PolicyU.S. Chamber of Commerce
Small businesses, self-employed, independent contractors, non-profits
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Paycheck Protection Program – What’s next?
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• 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
Small Business PolicyU.S. Chamber of Commerce
Small businesses, self-employed, independent contractors, non-profits
The experts say you should apply ASAP
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• $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
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Small businesses, self-employed, independent contractors, non-profits
Small Business PolicyU.S. Chamber of Commerce
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Keep up to date
www.uschamber.com/co
Download our guide:
www.uschamber.com/sbloans
Learn more about the Paycheck Protection Program
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Wrap up
ASK THE EXPERTS Q&A
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InformedonReform.com
THANK YOU
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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.
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