This CRS Insight presents selected resources and CRS products potentially relevant to medium and large businesses directly affected by the Coronavirus Disease 2019 (COVID-19) pandemic seeking economic relief and assistance.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, contains provisions to assist businesses. This Insight focuses on potential sources of assistance designated for medium and large businesses that do not qualify for Small Business Administration programs or other assistance programs for small businesses. For small business assistance programs, see CRS Insight IN11301, Small Businesses and COVID-19: Relief and Assistance Resources, by Maria Kreiser.
Note that this Insight may not include every instance of federal assistance to medium or large firms provided in response to the COVID-19 pandemic. Firms of this size may have, on occasion, received funding via other CARES Act mechanisms or facilities. These firms' eligibility for this other funding may be due to factors or combinations of factors such as the structure of particular programs, how the firm is organized, or situations involving a specific industry.
The Treasury's Preserving Jobs for American Industry resource page describes two programs that provide federal grants, loans, or loan guarantees directly to select businesses affected by the COVID-19 pandemic—the Payroll Support Program and the CARES Act Loan Program. Both programs were announced on March 30, 2020.
The Payroll Support Program benefits airline industry employees only, providing up to $25 billion for passenger air carriers, $4 billion for cargo air carriers, and $3 billion for airport contractors, including those that provide food, security, ticketing, and cleaning services to air carriers. The details of the assistance are outlined in two documents released April 2, 2020, and April 3, 2020. Applications were accepted online until April 27, 2020. Applications received after this date are considered at the discretion of the Secretary of the Treasury, and they are not guaranteed assistance.
The CARES Act Loan Program has limited eligibility, and it provides up to $25 billion for passenger air carriers, $4 billion for cargo air carriers, and $17 billion for businesses critical to national security. Treasury released procedures and minimum requirements for the program on March 30, 2020, a frequently asked questions document on April 6, 2020, and then opened the online application on April 8, 2020. Applications received after April 30, 2020, will be considered at the discretion of the Secretary of the Treasury, and they are not guaranteed assistance.
In general, companies that apply for assistance must, among other things, be part of the specified industries, maintain their current employment levels until at least September 30, 2020, and suspend stock buybacks and dividend payments until September 30, 2021 (for payroll support) or until one year after the loan received is repaid (for the loan program).
For a more on these CARES Act assistance provisions see CRS Report R46329, Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act (P.L. 116-136), coordinated by Andrew P. Scott.
The Federal Reserve System's COVID-19 resource page outlines the actions the Fed has taken in response to the pandemic. Three emergency funding, credit, liquidity, and loan facilities that could potentially assist medium and large corporations are described below.
The Main Street Business Lending Program benefits businesses that were in "good financial standing" with their lending institutions before the pandemic. To receive loans under this program, the business must have no more than 10,000 employees or had no more than $2.5 billion in revenue in 2019.
Once the program is operational, it will run through two facilities, the Main Street New Loan Facility (MSNLF) and the Main Street Expanded Loan Facility (MSELF), with eligible lenders (e.g., banks) making loans to eligible borrowers (i.e., businesses). The MSNLF assistance targets new loan financing and the MSELF targets existing loan financing.
In general, businesses are eligible if they were established in the United States and have the majority of their operations and employees there. They may apply through the MSNLF for four-year term loans for amounts between $1 million and $25 million (originated on or after April 8, 2020) and through the MSELF for loans between $1 million and $150 million (originated before April 8, 2020), with both loan amounts capped by their existing debt levels and ratios.
Businesses applying for assistance using the Main Street Lending Program may participate in either facility (MSNLF or MSELF), but not both. Other details of the Main Street Lending Program are still being worked out. The Fed previously solicited comments from stakeholders that were due by April 16, 2020.
The Commercial Paper Lending Facility (CPFF) will purchase commercial paper (short-term debt) from eligible corporations until March 17, 2021. The terms and conditions, released March 17, 2020, and updated March 23, describe eligibility requirements. The purchases will be made through the Fed's primary dealers, rather than directly from the businesses themselves.
In general, issuers of U.S. commercial paper, including municipal issuers and U.S. issuers with a foreign parent company, are eligible if their paper held a high credit rating on March 17, 2020, the day the program was announced.
The facility is not yet operational, and the Fed has not yet announced a date by which more detail will be available.
The Primary Market Corporate Credit Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF) are to support corporate bond markets by buying corporate debt. The PMCCF is to purchase newly issued debt, and the SMCCF is to purchase already existing debt.
In general, businesses may participate in these facilities if their corporate credit rating was investment grade on March 22, 2020, the day before the program was announced.
Firms participating in Main Street Lending may not participate in the PMCCF.
Neither facility is operational, nor has the Fed announced a date by which they will begin.
Eligibility for the CPFF, PMCCF, and SMCCF is not limited by firm size, but firms must have already been active issuers in these markets before COVID-19. Generally, larger firms are more likely to have been issuers.
For more information on these programs, see CRS Report R44185, Federal Reserve: Emergency Lending, by Marc Labonte, and CRS Insights on Federal Reserve emergency lending, commercial paper, and corporate bond markets.