Title IV Mid-Size Business Loans

Summary
Title IV of the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides $500 billion to the Treasury’s Exchange Stabilization Fund and this includes at least $454 billion to be used for loans, loan guarantees, and investments for eligible businesses, states, and municipalities. Within this fund is a program for direct, low-interest loans for Midsize Businesses. This funding can be applied for and approved on a case-by-case basis. The following is a review of the program and its applicability:

Who is eligible: Midsize Businesses Loans are for “eligible businesses” and nonprofit organizations with between 500 to 10,000 employees. Eligible businesses are defined as a United States business “that has not otherwise received adequate economic relief … under [CARES Act]”.

Timing: Loans must be made before December 31, 2020.

Terms: The maximum interest rate is set a 2% and there is a 6 month payment deferment period.

Requirements: To participate in the Midsize Loan Program, businesses must certify that the relief is necessary to support ongoing operations, workforce levels will be restored or maintained at 90% of March 1, 2020 levels, no offshoring outsourcing will take up to 2 years after completion of repayment, and the domestic status of the business.

Other Factors:

• Midsize Business Loans are not eligible for loan forgiveness.
• Loans are treated as indebtedness for tax purposes.
• Certain conditions apply including prohibiting dividend payments, stock buybacks, and limitations on compensation for highly compensated employees.
• Further clarification is expected in the coming weeks.