Thanks to those that joined us today for our COVID Town Hall Virtual Conference. If you missed it, the video recording is posted on our Coronavirus resource page along with all of our other video recordings, daily updates, and archived documents. Here is today’s news.
Latest on the Main Street Lending Program
If it seems like we have been talking about this forever, you’re about right. Now new talked about revisions to the Main Street Lending Program include reduced minimum loan values and longer repayment terms, making them more desirable for smaller companies. The central bank on Monday announced a number of changes that widen eligibility for companies and sweeten loan terms, making borrowing more palatable for smaller companies. The Fed program is expected to run directly through federally insured depository institutions, including banks, savings associations, and credit unions, and the Fed says it will support up to $600 billion in new loans. Business owners who have received PPP loans are permitted to apply, but any business that applies must demonstrate that it was in good order before the Covid-19 crisis.
The changes to the Main Street Lending Program are as follows:
- Increases the maximum loan size. Banks can now lend up to $35 million or $50 million in new loans or refinance up to $300 million in an existing loan if a firm’s total debt, relative to its 2019 earnings, is below noted thresholds. To access one of the three loan facilities, a company needs to have a minimum of just under $42,000 in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2019 and no debt. Previously, companies had to have generated at least $83,000 in adjusted 2019 EBITDA to be eligible, and the maximum loan values were $25 million and $200 million.
- Lowers the minimum loan amounts. The minimum borrowing is now $250,000, down from $500,000 for two of the programs. The third offers loans that start at $10 million.
- Extends the repayment period to five years from four years. The new rules also allow for two years of deferred payments and one year with no interest charges. The repayment terms are now standard across the three facilities: Borrowers must repay 15 percent in years three and four. In year five, borrowers must repay 70 percent. Previously, repayment terms differed by facility.
- Raises the Fed’s participation to 95 percent for all loans. Banks need only keep 5 percent of a loan’s value on their books. The rest will get sold to a special purpose vehicle, housed by the Fed. Previously, one of the loan facilities required banks to hold 15 percent of the loan’s value.
Three Week Period to Pass the Next Funding Bill
Senator McConnell told Republicans he viewed the next work period as the time to take up and pass a bill. That period is set to run from July 20th to August 7th. Senate Democrats are trying to build public pressure on McConnell to bring a bill to the floor this month, warning that if Republicans wait too long, they could throw new chaos into the economy. They will push the fact that we’re in the middle of a recession which began back in February. On the House side, they are only scheduled to be in session for two weeks in July before their August recess. This obviously will complicate matters even more.
Update on PPP Flexibility Act Webinar
Join SBA’s Illinois District Office for an online training on the SBA’s relief programs for small businesses impacted by COVID-19, including the Paycheck Protection Program. The last day the SBA can accept loan applications from lenders is June 30. The webinar will take place on Friday the 12th at 10:30 am. You can register here: https://www.eventbrite.com/e/ppp-update-covid-19-resources-for-small-businesses-tickets-109034665620?utm_medium=email&utm_source=govdelivery
New Unemployment Projections (Long Term)
Federal Reserve officials expect the unemployment rate to remain above 9% until the end of 2020, with the economy shrinking by more than 6% in that time, according to projections released Wednesday. The unemployment rate was near a 50-year low of 3.5% in February before it spiked to 14.7% in April amid closures due to the coronavirus pandemic.
First Airline to Require Health Test
United Airlines will become the first U.S. airline to screen passengers before boarding a flight. They will be asking a series of questions about their health in addition to wearing masks onboard. These questions will be similar to those used in hospital and other settings. Among the screening questions that went into effect yesterday, passengers checking in at the airport will be asked to verify that they have not been diagnosed with COVID-19 in the past 21 days and that they have not had close contact with someone who tested positive for COVID-19 in the last 14 days.
Passengers will be asked to verify they have not experienced any of the following symptoms in the past 14 days, excluding symptoms from pre-existing conditions:
- temperature of 38 C/100.4 F or higher
• shortness of breath/difficulty breathing
• muscle pain
• sore throat
• recent loss of taste or smell
They’ll also be asked to verify they have not been denied boarding by another airline due to a medical screening for a communicable disease in the last 14 days. Passengers who fail the screening will be allowed an opportunity to reschedule or request a flight credit.
Chicago Announces Plans to Spend Their $1 Billion in Federal Funds
The City of Chicago has given the go ahead to Mayor Lightfoot to spend $1.13 billion in federal funds in response to COVID expense. The funding includes help for the city’s airports ($82 million for Midway and $295 million for O’Hare), $189 million for contact tracing, testing and personnel, and $410 million for future COVID response in the months to come. The mayor’s proposal also includes $35 million in small-business assistance, split between the city’s resiliency loan program ($25 million) and the microgrant program ($10 million). Additional funds will be focused on housing (allotted $12.5 million for rent help and $3.5 million for mortgage help), violence prevention (allotted $10 million), and broadband access ($5 million for CPS students without internet).
Finally, changing gears here a little to announce a call for feedback on the recent civil unrest. The DCEO is working with U.S. Small Business Administration (SBA) who can provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by civil unrest in counties who have received a disaster declaration through SBA. As a part of this process, they need to collect information from businesses that have been negatively impacted. The information submitted through this form will assist in requesting a disaster declaration for our county from SBA.
Please note: This form is not an application for funding and information obtained will not be used for or against you if you decide to later submit an application for a loan through SBA. As they are able to secure declarations by county, they will send out information regarding loans (including links to applications) and businesses that fill out this form will receive this information directly.
If your business has been impacted due to the civil unrest, including property damage or other losses, we ask that you please take a moment to fill out this form so the SBA will have all necessary information to move forward. https://form.jotform.com/201536819658061
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry
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