Crisis Management

COVID-19 Relief Measures for Private Companies

FEI Committee on Private Companies
Legislation, Regulation, Accounting Standards & Advocacy Special Interest Group

Summary of COVID-19 Relief Measures*

* This represents a brief summary of some of the financial relief measures passed as of April 10, 2020. Please consult an advisor for detailed requirements that must be met for eligibility for each of the programs described below.

Federal Legislation Passed to Date:

1. Phase 1” - Coronavirus Preparedness and Responses Supplemental Appropriations Act
$8.1 billion bill signed by President on March 6, 2020

  • Provided funding to CDC, global health programs, research, and money for development of health supplies and development of vaccine

2. Declaration of Emergency Disaster
Signed by President on March 13, 2020

  • Makes $50 billion of funds available to states and territories
  • Permits Small Business Association (SBA), under Stafford Act, to be able to provide up to $2 million in emergency capital to eligible businesses impacted by COVID-19
  • Suspends interest payments on student loans
  • Provides HHS expanded authority to provide flexibility to health providers caring for COVID-19 patients
  • Provides Treasury Secretary authority to relax filing deadlines

3. "Phase 2" - Families First Coronavirus Response Act (H.R. 6201)
$192 billion dollar bill signed by President on March 18, 2020

  • Focuses on relief for individuals and businesses with less than 500 employees
  • Mandatory temporary Paid Sick Leave to employees, up to 10 days, for small businesses and employees meeting certain requirements.
  • Provides Family and Medical (FMLA) leave, parents and caregivers, and allows up to 2/3 pay for 12 weeks to employees who can’t work due to childcare/school closures
  • Cost to employers is funded by a Refundable Payroll Tax Credit. Can be claimed in advance of payroll tax filing, i.e., AD
  • Provides for free COVID-19 testing, increased funding for unemployment, Medicaid and nutrition programs

4. Phase 3” – Coronavirus Aid, Relief, and Economic Security (CARES) Act
$2.2 trillion bill signed by President on March 27, 2020.  Below are highlights, with attention to Small Businesses:

  • Individuals/Families $604 billion (30%)
    -  Direct cash stimulus payments to individuals- $1200/individual making up to $75,000, phased out at $100,000; $500 payment to families per child
    -  Suspension of all Federally held student loan payments
    -  Forbearance of Federally backed mortgage payments up to 6 months
    -  Expansion of unemployment benefits
  • Large Businesses ($500 billion)
    -  Focus is to stabilize big businesses in hard-hit sectors. Approximately $58 billion is earmarked for the airline industry and $17 billion for maintaining national security.
    - On April 9 Treasury & Federal Reserve announced Main Street Lending Program.
    Designed for mid-large businesses with up to 10,000 employees or $2.5 billion revenues in 2019, enabling up to $600 billion in new financing. Details to be provided, but Federal Reserve will establish two loan facilities through the use of Special Purpose Vehicles, using $75 billion of CARES funding. Loan application to be made with the participating bank, not the Federal government.
  • Other Programs to be provided at a later time
  • Small Business $377 billion (19%)
    - Provides Small Business Administration (SBA) with $350 BN for loans through Payroll Protection Program (PPP).  To be eligible, business must have less than 500 employees (aggregation rules have not been finalized). Maximum loan amount is 2.5 times average monthly payroll, with a maximum of $10MM.
    Terms- The loan will have a 2-10 year repayment period, rate is fixed at 1%, with no fees. The most attractive aspect is that it may be eligible to be forgiven, in whole or in part, if proceeds received are used for payroll, rent, utilities or mortgage payments, and at least 75% of workforce is retained. There are detailed requirements in order to meet the eligibility criteria, in addition to a time constraint of utilizing the funds for restricted purposes within 8 weeks of receipt.The PPP program was opened up to sole proprietorships and independent consultants on 4/10.2020.
    - Also available are Economic Injury Disaster Loans (known as SBA7) made available (see Emergency Declaration)
    - Advance Refunding of Payroll Credits (Sec.3606)
    - Employee Retention Credit for Employers Subject to Closure Due to COVID-19 (Sec. 2301)
    - Delay of Payment of Employer Payroll Taxes (Sec. 2302)
    - Provides SBA $10 billion in grants for small businesses to cover short-term operating costs
  • State and Local Government $340 billion (17%)
    - Provides funding to state and local governments to fight COVID-19, as well as to schools and childcare services
  • Public Services $180 billion (9%)
    - $100 BN in grants to healthcare providers to fight COVID-19
    - Funding for National Stockpile for ventilators and masks, as well as food security

5. Miscellaneous Tax Provisions
- Change in TCJA Carryback of Net Operating Losses (NOLS)- permits limited carryback of NOLs, as well as permitting 100% utilization instead of 80%
- Technical Correction issued for Qualified Improvement Property (QIP), correcting for an error in the drafting of TCJA and permitting 15-year life and 100% expensing for non-residential improvements
- Relaxation of Interest Expense Limitations imposed under IRS Section 163(j), allowing for the limitation to be raised from 30% to 50% of EBITA
- Special Treatment of Disaster Losses (resulting from the Emergency Declaration of 3/13/20)- Allows the deduction of eligible losses sustained 1 year prior to when incurred (ie., 2020 loss can be deducted in 2019)
- Accelerated Refundability of AMT credits – to provide liquidity
- Relaxation of Excess Business Loss of IRS Section 461(l)

6. Accounting Standards
- On April 8, the Financial Accounting Standards Board (FASB) issued a decision to delay implementation of two updated accounting standards on leases and revenue for contracts with customers.
- Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606): For Franchisors that are not public business entities, the effective date of this accounting standards update was amended to annual reporting periods beginning after December 15, 2019 and interim reporting periods within annual reporting periods beginning after December 15, 2020
- Accounting Standards Update No. 2019-02, Leases (Topic 842): For private companies and not for profit entities (NFPs), the effective date of the accounting standards update was amended to reporting periods beginning after December 15, 2021, and to interim periods within fiscal years beginning after December 15, 2022. The effective date for NFPs that have issued or are conduit bond obligors for securities that are traded, listed or quoted on an exchange or an over-the-counter market (public NFPs) and which have not yet issued financial statements was amended to be fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption will continue to be permitted. FASB issued a Frequently Asked Questions document to address questions associated with the delay in implementation of the leases standard.
- Temporary Delay of Financial Accounting Standards Board ASC Topic 326- Financial Credit Losses (CECL).
In an unusual move, the Federal government provided for the delay of the required compliance with FASB Accounting Standards Update (ASU)2016-13, beginning on the date of enactment of the CARES Act  until the earlier of 1) the date on which the national emergency related to the COVID-19 outbreak is terminated, or 2) December 31, 2020. In addition, the CARES Act includes provisions that suspend the requirements related to accounting for a troubled debt restructuring for certain entities. These accounting standards are generally germane to financial institutions.

For Additional Information please contact:
Arlene Schwartz
Chair, Legislation, Regulation, Accounting Standards & Advocacy Special Interest Group
Financial Executives International                                  
[email protected]

Brian Cove
Managing Director, Technical Activities
Financial Executives International (FEI)
[email protected]