Coronavirus Aid, Relief, and Economic Security Act: Sweeping Stimulus Legislation Authorizes $500 Billion to Support Distressed Sectors of the Economy, Temporary Suspension or Modification of Certain Banking Provisions and Nearly $350 Billion to Support Small Businesses Through a Temporary Paycheck Protection Program in Response to the Coronavirus Outbreak

Sullivan & Cromwell LLP - March 29, 2020

On Friday, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act,” or the “CARES Act,” which authorizes approximately $2 trillion in relief for businesses and workers that have been affected by recent events related to the coronavirus outbreak.  The CARES Act was adopted on March 25, 2020 in the U.S. Senate by a vote of 96 to 0, and in the U.S. House of Representatives on Friday by a voice vote.  This legislation is the third federal legislative response to the ongoing coronavirus outbreak, following the enactment on March 6, 2020 of supplemental appropriations in the “Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020” and the enactment on March 18, 2020 of provisions relating to, among other things, paid sick leave and COVID-19 testing in the “Families First Coronavirus Response Act.”  The CARES Act also complements extraordinary efforts the Federal Reserve has taken in response to the coronavirus outbreak.

This memorandum summarizes the provisions in Subtitle A of Title IV and the Small Business Administration paycheck protection program in Title I of the CARES Act.  Subtitle A of Title IV, among other provisions, authorizes up to $500 billion in loans, loan guarantees and other investments by the Secretary of the U.S. Department of the Treasury in support of eligible businesses, states and municipalities, and temporarily suspends or amends, or authorizes temporary changes to, certain provisions applicable to banking institutions.  Title I authorizes up to nearly $350 billion in lending to small businesses through a temporary paycheck protection program to be administered by the Small Business Administration.

Our Firm expects to issue additional Client Memoranda in the coming days addressing specific aspects of the legislation.