By Jennifer Kobylarz, CPA, MST

The Act deems businesses with employee counts between 500 and 10,000 to be mid-sized businesses. The Act allows for direct loans with interest rates not to exceed 2%. Furthermore, no interest or principal payments will be due for the first six months.

A good faith certification of the follow must be made by any business that participates in a mid-sized business program.

  1. The uncertainty of the economic conditions as of the date of the application makes necessary the loan request to support the ongoing operations of the recipient;
  2. The funds received will be used to retain at least 90% of their workforce, at their full compensation and benefits rate until September 30, 2020;
  3. The recipient of the loan intends to restore not less than 90% of the total workforce employed as of February 1, 2020 and to restore all of the compensation and benefits those workers had no later than four months after the termination of the public health emergency declared on January 31, 2020;
  4. The recipient is an entity or business that is domiciled in the US with significant operations and employees located within the US;
  5. The recipient is not a debtor in a bankruptcy proceeding;
  6. The recipient is created or organized in the US or under the laws of the US and has significant operations in and a majority of its employees are based in the US;
  7. The recipient will not pay dividends with respect to the common stock of the eligible business, or purchase an equity security that is listed on a national securities exchange of the recipient or any parent company of the recipient, while the direct loan is outstanding (except as required under a contractual obligation that was in effect as of the date the CARES Act is enacted);
  8. The recipient will not outsource or offshore jobs for the term of the loan and two years after completing the repayment of the loan;
  9. The recipient will not abrogate existing collective bargaining agreements for the term of the loan and for two years after the loan has been repaid; and
  10. The recipient will remain neutral in any union organizing effort for the term of the loan.

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