COVID-19 Response: Federal Aid Package Presents Opportunities for American Businesses Impacted by Coronavirus
Washington, D.C. (March 20, 2020) - The ongoing coronavirus (COVID-19) crisis is precipitating an unprecedented federal response as Congress and the Administration grapple with how to address the economic downturn resulting from efforts to contain the spread of the virus. Numerous industries have been adversely affected, with even stronger impacts on small businesses. In response, Congress and the Executive Branch are negotiating a large financial stimulus package to ease the economic pain. This and future federal action presents opportunities for businesses impacted by the economic downturn to seek federal financial and regulatory assistance. Competition for a limited pool of resources is fierce, and affected businesses should act quickly to make their interests known to Congress and the Executive Branch.
On March 18, the Department of Treasury (Treasury) released a proposal to provide economic relief during the COVID-19 crisis. Treasury is proposing $300 billion for a small business (500 employees or less) interruption loan program for employers. Additional relief would include $150 billion in secured loans or loan guarantees to assist severely distressed sectors of the U.S. economy, $50 billion for the airline industry, and $500 billion in direct payments to taxpayers. This broad proposal presents financial opportunities not only to American small businesses, but also to many other severely distressed American businesses. This proposal represents a starting point for legislative negotiations. Congress must appropriate funding to enact the proposal.
Concurrently, Congress is moving forward with a similar economic package that will likely include relief for small businesses, financial assistance to taxpayers, loans for affected sectors of the economy, and additional resources to combat the virus. On March 19, Majority Leader Mitch McConnell released The Coronavirus Aid, Relief, & Economic Security Act. The bill directs payments to individuals making under $75,000 annually, provides $208 billion in loans to impacted major industries, including up to $50 billion for airlines, allows for forgivable loans to small businesses and expands the allowable uses for small business loans. Senate Democrats have also outlined a $750 billion emergency plan that would address hospital capacity issues, expand unemployment insurance, provide federal loan forbearance, and provide aid to small businesses, schools, and public transportation. Senate Republicans and Democrats are currently negotiating a final package, which will require approval of the Senate and House of Representatives (House).
Both the House and Senate are motivated to negotiate an economic stimulus package, but some aspects of the proposal are already facing political opposition. For example, some are arguing against financial assistance to fossil fuel companies or calling for carbon emission reduction requirements as a condition of assistance to airlines. In addition, the economic impacts of the COVID-19 response are extraordinarily wide-ranging and any final package will have to carefully balance financial and policy requests from a significant number of affected American businesses and industries.
Lewis Brisbois’s Government Relations team is experienced in assisting clients to develop and implement advocacy strategies before Congress and the Executive Branch.
Karen C. Bennett, Partner
Jane C. Luxton, Partner
Amanda L. Tharpe, Associate