Congress Passes CARES Act
On March 26, 2020, the Senate passed “Phase III” of the Coronavirus Response Package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act in a 96-0 vote. The House passed, by voice vote, the $2 trillion bill on Friday, March 27, 2020. A full summary of the CARES Act can be found here. Several provisions that will be beneficial to NECA Contractors, include:
- Small business support for companies with 500 or less employees:
- The Paycheck Protection Program creates a $349 billion emergency loan program for small businesses (not more than 500 employees, or the applicable Small Business Administration (SBA) size for an industry) to maintain payroll, group health benefits, mortgage payments, utilities, and other debt obligations incurred before the covered period. The loans will cover the period from February 15, 2020 through June 30, 2020.
- The SBA is given delegated authority to make loans without usual credit checks, although the SBA will still determine whether the business was viable on February 15, 2020 by reviewing payroll and other records. Borrowers also need to make good faith certifications that the loan is being sought due to COVID19 related circumstances.
- Loan forgiveness is made available for SBA loans equal to the amount the borrower spends in an eight-week period after the origination date to cover payroll, interest payments on mortgages (incurred before Feb. 15, 2020), rent and utility bills where service began before Feb. 15, 2020. Payroll costs do not include compensation over $100,000 per year. Mortgage costs do not include prepayments. Borrowers that re-hire laid off workers are not penalized for having reduced payroll at the beginning of the loan period.
- Other features include:
- The maximum loan amount is $10 million.
- The interest rate is a maximum of four percent.
- Affiliation rules for franchise businesses are waived.
- Borrower and lender fees for participation in the Paycheck Protection Program are waived.
- SBA Express Loan maximum is increased to $1 million from $350,000 through December 31, 2020
NECA’s Look Ahead: The Senate adjourned for Recess until April 20, 2020. However Senate Majority Leader Mitch McConnell (R-Ky.) suggested Senators may need to return to Washington sooner than the scheduled return date. Members of Congress are already working on a “Phase IV” package and NECA will continue to be in discussions with legislators to ensure continued relief is provided for the electrical construction industry.