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April 9, 2020

COVID-19 UPDATE: PPP and Main Street Lending

We continue our efforts to keep you informed of key legal developments relating to COVID-19. Today, we provide a few updates on developments at the national and local levels. For our previous updates, please see HERE.


SBA Paycheck Protection Program

The SBA Paycheck Protection Program (“PPP”) created under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) is generating extraordinary demand for Paycheck Protection Program loans. As we highlighted yesterday, in response to this demand, the Trump Administration requested an additional $250 billion for the program. While there is bipartisan support for additional PPP funding, Democrats and Republicans reportedly blocked each other’s proposals on the Senate floor today. Among other things, Democrats are proposing an add-on to the additional funding that would provide billions in assistance for hospitals and state governments. Our expectation is that these issues will be resolved and additional funds will be provided to the PPP to meet expected demand and to assuage concerns that the program’s funds will be depleted.

In terms of the PPP rollout, we encourage you to visit the regularly updated FAQs on the website for the U.S. Department of the Treasury (the “Treasury”) HERE, which in addition to answering frequent questions, provides clarification of issues that have arisen in the program rollout.

The Treasury has previously announced that self-employed individuals and independent contractors may begin submitting PPP applications tomorrow, April 10th. However, as of this writing, there is still no guidance with respect to the application process, lender access, or any additional considerations that may affect eligibility for these loans. We will continue to monitor this situation and provide updates as information becomes available.

Federal Reserve Main Street Lending Program

Today, the Federal Reserve unveiled $2.3 trillion in loan programs to help boost the economy. This package includes a “Main Street Lending Program” that will provide Main Street loans to businesses with up to 10,000 workers or with revenues of less than $2.5 billion. For the Federal Reserve’s full press release, see HERE. It is not clear the extent to which smaller businesses can access this program.

The maximum amount that an applicant can borrow under the Main Street Loan Program is the lesser of: (1) 4 times the applicant’s 2019 EBITDA less outstanding and committed but undrawn debt, and (2) $25 million. No announcement has been made with respect to underwriting criteria. Notably, businesses that have taken advantage of the PPP may also take out Main Street loans.

Further details announced today include:

  • Principal and interest payments will be deferred for one year;
  • The interest rate will be an adjustable rate equal to the Secured Overnight Financing Rate (SOFR) (currently 0.01%) + 250-400 basis points;
  • Eligible banks may originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses;
  • Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers;
  • Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act.

As this program is being finalized, the Federal Reserve and the Treasury will continue to seek input from lenders, borrowers, and other stakeholders. Comments may be sent to this feedback form until April 16.

Commercial Real Estate

We have received anecdotal reports from commercial landlords that they are willing to consider lease payment deferrals, provided that – to the extent they qualify – their tenants apply for government emergency relief programs for businesses, including the SBA Paycheck Protection Program.

Airports/Aviation Industry

This week, the U.S. Department of Transportation (“DOT”) issued its Final Order on Service Obligations for Air Carriers Receiving Financial Relief through the CARES Act (the “Final Order”). The Final Order establishes parameters for implementing the authority granted to the Secretary of Transportation by Sections 4005 and 4114(b) of the CARES Act. The Final Order requires air carriers receiving financial assistance under the CARES Act to maintain minimum air services on a nationwide basis, with some exceptions. Of note, the Final Order requires covered carriers seeking a waiver from their minimum service obligations to notify impacted parties and for those parties to comment to the DOT regarding the proposed waiver. For the full text of the Final Order, see HERE.


City of Chicago Procurement

The City of Chicago's Department of Procurement Services has been transitioning from paper bids to eProcurement online bids. We have learned that a number of active paper bid solicitations have recently been converted to the City's eProcurement system. As a result, the solicitation documents can now only be viewed under the eProcurement Bid Opportunities page (see HERE).

Registration with the eProcurement system is not necessary to view bids, however, vendors must be registered in the system if they wish to bid on a project. The City has placed training materials on its website that explain how to register as a vendor and bid on projects. These materials can be found at:

We will continue to send periodic updates on topics that may be helpful to your businesses. If you have a particular issue that you’d like us to address or if you’d like to be removed from the distribution list, please let us know.

Feel free to contact us with any questions.

Gery Chico, Jon Leach, and Alpita Shah

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