The federal government of the United States has launched various initiatives in response to the outbreak of COVID-19, in order to address the economic difficulties that many businesses – especially smaller ones - suffer as a consequence of the pandemic. Governmental initiatives include loan programmes, grants and tax credits – more programmes are expected to follow, due to the increased efforts the U.S. government has taken on with the aim of supporting the economic recovery of the country. 

On the 27th of March 2020, the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was signed into law, representing the third major piece of federal legislation in response to the COVID-19 pandemic. The CARES Act includes $349 billion in Small Business Administration (SBA) loan guaranties, subsidies and programs, making it possible to expand the SBA´s Loan Programme to include a Paycheck Protection Programme, for which eligible businesses can apply in order to guarantee their employees continuous payment. Also, the maximum loan amount of an SBA Express Loan is increased. 

Also, businesses are eligible for loan forgiveness under certain circumstances. To be specific, businesses operating on February 15, 2020, which have a pending or approved loan application under the programme, are eligible for loan forgiveness (principal, interest and fees) in an amount equal to the sum of eligible costs incurred and payments made during the covered period. The forgiveness amount can be up to 100% of the loan but is not to exceed the loan’s principal amount. 

Part of the Coronavirus Preparedness and Response Supplemental Appropriations Act, which was the first major piece of legislation in response to the COVID-19 pandemic enacted on March 6th 2020, was the authorization of the SBA to provide an estimated $7 billion in assistance through its Economic Injury Disaster Loans (EIDL) programme. It provides certain small businesses, which must meet certain criteria to qualify for it, with low-interest loans of up to $2 million. Requirement waivers for eligible businesses under the EIDL programme are either a) personal guarantees on loans of $200,000 or less during covered period, b) applicant being in business one year prior to the disaster, or c) applicant being unable to obtain credit elsewhere. Applicants for an EIDL loan can furthermore apply for an emergency grant of up to $10,000 as an advance to cover payroll, sick leave and other debts. Additionally, $17 billion is made available to SBA under the CARES Act to pay the principal, interest and associated fees on existing SBA loan products, thus providing debt relief to existing SBA loan participants. 

Certain companies also qualify for financial assistance. The CARES Act includes the Coronavirus Economic Stabilization Act of 2020 (the “CESA”). CESA sets aside approximately $500 billion dollars and enacts other measures to provide liquidity to eligible businesses that are suffering as a direct result of the COVID-19 emergency. For example, the CESA aims to support Airlines and National Security Businesses. It authorizes the U.S. Department of the Treasury to provide up to $25 billion in loans or loan guarantees to commercial airlines, ticket agents, and businesses that perform aircraft maintenance inspection services, $4 billion in loans or loan guarantees to cargo air carriers, and $17 billion in loans and loan guarantees to businesses critical to maintaining national security. 

Furthermore, the Treasury is also authorized to provide $454 billion (plus any amount of funding that is not provided to the airline or national security industries) in loans, loan guarantees and other investments to programs or facilities established by the Federal Reserve that will provide liquidity to the financial system that supports lending to eligible businesses, including mid-size businesses, states, or municipalities. 

Another initiative of the government that forms part of the Families First Coronavirus Response Act (FFCRA) – the second major piece of federal legislation in response to the COVID-19 pandemic – was the creation of two refundable federal tax credits. These credits, which are against FICA taxes, are available employers with 500 or fewer employees and can offset the cost of providing Covid-19-related leave to their employees. Comparable credits and limitations are available to self-employed individuals as well. Also, a Payroll Tax Credit for Paid Sick Leave, was implemented, which is a tax credit equal to the daily wages paid to an employee taking sick leave due to Covid-19 is available. Equivalently, there is also a Payroll Tax Credit for Paid Family Leave: a tax credit equal to the daily wages paid to an employee taking qualified family medical leave. 

Another governmental initiative concerns the forbearance of residential mortgage loan payments for multifamily properties with federally backed loans. Pursuant to the CARES Act, a multifamily borrower with a federally-backed multifamily mortgage loan that was current as of February 1, 2020 may request a forbearance if it is experiencing a financial hardship due to the pandemic. A multifamily borrower that receives a forbearance cannot during such forbearance evict or initiate the eviction of a tenant solely for the non-payment of rent or other fees nor can such borrower charge late payment penalties to a tenant. In addition, a multifamily borrower cannot require a tenant to vacate during the forbearance period or without 30 days' notice.

Also, there is a moratorium for evictions. Under the CARES Act, for 120 days beginning upon enactment, a landlord of a multifamily property is prohibited from initiating legal action to evict a tenant solely to due to the non-payment of rent or charging fees, penalties or other charges to the tenant related to such non-payment of rent where the landlord’s mortgage on that property is insured, guaranteed, supplemented, protected or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program or the Violence Against Women Act of 1994.

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