Brownstein Client Alert, March 18, 2020
The Treasury Department released a document outlining the key terms of its negotiations on the upcoming third phase of the congressional economic stimulus package. Below are the terms as outlined by the department:
Appropriation to the Exchange Stabilization Fund for Specified Uses
- Airline Industry Secured Lending Facility. The Treasury Department would provide $50 billion to secure lending for passenger and cargo carriers, with the interest rate to be determined by the department. Borrowers would be required to outline plans for continuation of service and limitations on increases in executive compensation until the loans are repaid.
- Other Severely Distressed Sectors of the U.S. Economy. The Treasury Department would provide an additional $150 billion to secure lending and loan guarantees to sectors undergoing significant strain due to the coronavirus.
Temporarily Permit Use of the Exchange Stabilization Fund to Guarantee Money Market Mutual Fund
The Treasury Department would temporarily suspend the ESF limit for guarantee programs related to the U.S. money market mutual fund industry. The new statutory authority would be extinguished at the conclusion of the presidentially declared national emergency.
Economic Impact Payments
The Treasury Department would authorize and appropriate funds for two installments of direct payments to individuals through the Internal Revenue Service and the Bureau of the Fiscal Service. The federal government would provide $250 billion by April 6 and another $250 billion by May 18, and each individual would receive the same amount both times. The payments would be based on income level and family size.
Small Business Interruption Loans
In an attempt to provide continuity of employment due to virus-related business interruptions, the Treasury Department would establish a small business interruption loan program. The department would provide $300 billion for the new program, which would provide a 100% guarantee on each qualifying loan.
Employers with fewer than 500 workers would be eligible for the loans, which would provide businesses six weeks of payroll, with an upper limit of $1,540 per week per employee (about $80,000 annually). Additionally, borrowers must continue paying all employees for at least eight weeks once the loan is provided.
The document can be found here.
Information is changing daily and some of the content included in this alert may have changed or been updated since publication.
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