Last Updated - March 27, 2020


Resources for Member Companies



MEMA and Arent Fox – Information and Guidelines on Mid-Size Business Loan, Paycheck Protection, Paid Sick Leave, and Expanded Family/Medical Leave


Attached is the MEMA summary of the programs with advice from MEMA legal counsel Arent Fox:


Summarizing the Mid-Size Business Loan Program


Below is a summary of the Mid-Size Business Loan Program, which is included in the Coronavirus Economic Stabilization Act of 2020. Regulations from the Treasury Department are expected within 10 days after signing the bill into law. Arent Fox will continue to update, and expand on, this summary as more information becomes available.

Aggregate Funds Available          

$454 billion available for loans and loan guarantees to, and other investments in, programs and facilities established by the Federal Reserve.

Direct Loan Availability  

Federal Reserve programs and facilities that may be supported include direct loans to eligible businesses including nonprofit organizations

Eligibility Requirements 

1.            Organization: The recipient must be organized in the United States

2.            Employee Location: The majority of the recipient’s employees must be located in the United States.

3.            Size: The recipient must have between 500 and 10,000 employees.

4.            Eligibility for Other Programs: The recipient must not have otherwise received adequate economic relief in the form of loans or loan guarantees provided under the Act. We expect that the definition of “adequate” and how it will be determined will be clarified in the regulations.

5.            Bankruptcy: The recipient must not be a debtor in a bankruptcy proceeding.

Key Loan Terms

1.            Interest Rate: Capped at 2% per annum.

2.            Principal and Interest Payment Deferral: Both principal and interest will be deferred for at least six months.

3.            Other Loan Terms Undefined: The legislation does not include any provisions relating to the term of the loans, amortization schedules, prepayment terms, or other key terms. We expect that many of these provisions will be clarified in the regulations and/or guidance from the Federal Reserve.

Use of Proceeds              

Loan proceeds must be used to retain at least 90% of the recipient’s workforce, at full compensation and benefits until September 30, 2020.

Business Restrictions      

1.            Restoration of Workforce: The recipient must certify that it intends to restore at least 90% of its workforce (as of February 1, 2020), and to restore all compensation and benefits to its workers no later than four months after the end of the public health emergency, as determined by the Secretary of Health and Human Services.

2.            No dividends or Equity Repurchases: The recipient must certify that it will not pay dividends with respect to its common stock or repurchase equity security of the recipient or any parent company that is listed on a national securities exchange while the loan is outstanding except to the extent contractually committed as of the date of enactment of the legislation.

3.            No Outsourcing of Jobs: The recipient must certify that it will not outsource or offshore jobs for the term of the loan and for two years after completing repayment of the loan.

4.            Union Contracts: The recipient must certify that it will not abrogate existing collective bargaining agreements for the term of the loan and for two years after completing repayment of the loan.

5.            Union Neutrality: The recipient must certify that it will remain neutral in any union organizing effort for the term of the loan.

Executive Compensation Restrictions      

Officers and employees that received total compensation more than $425,000 in 2019 are not eligible for increases in total compensation above the 2019 level until one year after the loan is repaid.

Until one year after the loan is repaid, officers and employees that received total compensation of more than $3,000,000 in 2019 are limited to a salary equal to (i) $3,000,000, plus (ii) 50% of the excess over $3,000,000.

No retirement or severance packages can exceed twice the maximum total compensation during 2019.

Total compensation includes salary, bonus, awards of stock and other financial benefits.


Summarizing the Paycheck Protection Program


Our Task Force has a summary of the Short-Term Working Capital Loans to Support Small Businesses and The Hospitality and Restaurant Sectors.

Description and Purpose of Paycheck Protection Program

Congress passed “The Coronavirus Aid, Relief, and Economic Security Act” (CARES Act), which included the “Paycheck Protection Program” (PPP) for small businesses. The PPP provides short-term cash flow assistance to small businesses to help these businesses and their employees deal with the immediate economic impact of the COVID-19 pandemic. Loans are made by lenders certified by the Small Business Administration (SBA) and guaranteed by the federal government. The SBA will administer the PPP.

Eligibility Period

PPP loans must be made during the period prior to June 30, 2020.

PPP Eligible Business

The PPP is available to small business concerns (businesses that are independently owned and operated, organized for profit, and are not dominant in their field), 501(c)(3) nonprofits, 501(c)(19) veteran’s organizations and tribal business concerns with 500 or fewer employees (full and part-time) and not more than the applicable size standard for their industry, as provided by the SBA, if higher. The SBA publishes the applicable size standard for each industry, broken down by North American Industry Classification System code, every year, which can be found at the following website. Eligible small businesses also include sole-proprietors, independent contractors, or other self- employed individuals, such as “gig economy” workers.

The PPP is also available to franchises that are assigned a franchise identifier code by the SBA  (click here for the chart) and businesses in the accommodation and food services sectors (i.e., businesses with a NAICS code beginning in 72). For all such businesses, SBA’s “affiliation” rules, which aggregate affiliates as one entity, are waived. For accommodation and foodservice businesses, the 500 employee limit is 500 employees per physical location, not for the entire corporate entity. For example, a restaurant chain that employs 1,700 employees over 10 locations would be eligible for loans at each location that has less than 500 employees, under the PPP. Note that the affiliation rules are not waived for other small business concerns, nonprofits, and veterans organizations.

Use of PPP Loan Funds

Small businesses that receive loans under the PPP must use loan funds to pay payroll costs (i.e., salaries, wages, vacation, parental, family, medical, or sick leave, severance, retirement benefits, and state or local taxes assessed on compensation), costs related to group health care benefits (i.e., insurance premiums), employee commissions and tips, interest on mortgage obligations, rent, including rent under a lease, utilities or interest on other debt, incurred prior to obtaining the loan; provided, however, that PPP loan funds cannot be used to pay salaries over $100,000.

Payment Forgiveness

Principal amounts on PPP loans, for the first 8-week period from when the PPP Loan is made, may be forgiven, if loan funds are used to cover payroll costs, interest payments on mortgages (not including prepayments or principal), rent and utilities.

The amount of a PPP loan that may be forgiven cannot exceed the principal amount of the loan. To get the full benefit of loan forgiveness, businesses must keep their employees and pay them at least 75% percent of their prior-year compensation.

The amount of the loan that may be forgiven will be ratably reduced if the average number of full-time equivalent (FTE) employees during the 8-week forgiveness period is less than the average number of FTE employees at either, (a) the period February 15, 2019, through June 30, 2019, or (b) the period January 1, 2020, to February 29, 2020; the employer chooses which period to compare. To encourage employers to rehire workers laid off due to the COVID-19 crisis, employers that rehire previously laid-off workers will not be penalized for having a reduced payroll at the beginning of the forgiveness period. If, during the period from February 15, 2020, through 30 days after enactment of the CARES Act, there is either a reduction in the number of or wages paid to FTE employees and the employer eliminates the reduction by June 30, 2020, the amount of loan forgiveness will be determined without regard to the reduction.

To apply for forgiveness, businesses must submit documentation regarding the eligible uses of loan funds (payroll costs, mortgage interest, utilities, etc.), a certification that such documents are true and correct, as well the amount to be forgiven, and any other documentation the SBA Administrator deems necessary. The SBA will purchase any loan forgiveness amounts from its certified lenders and this canceled indebtedness will not result in taxable income to the business.

Payment Deferral

For principal amounts that exist after any loan forgiveness under the PPP, small businesses may defer payment of remaining principal, interest, and fee balances for at least 6 months and not more than a year. Under the PPP, all borrowers are allowed to apply for deferment and all lenders have to apply complete deferment for all remaining balances for at least 6 months. Thus, businesses under the PPP can get a substantial portion of their loan forgiven in the first 8 weeks after the loan is issued, and not have to make any payments for up to a year.

PPP Loan Terms

PPP loans can be as large as 250% of a business’s average monthly payroll costs over the last 12 months, not to exceed $10 million; provided, that, as noted above, salaries over $100,000 are not counted as payroll costs. PPP loans have a maximum interest rate of 4%. In addition, PPP loans only start to mature following the date an eligible business applies for loan forgiveness, as described in E. above, and can have a maximum maturity of ten (10) years from such date.

No Security or Personal Guarantee; SBA Fee and Hardship Requirements Waived; Recourse to Owners for Misapplied Loan Proceeds

No collateral is required to be pledged and the normal personal guarantee requirement for SBA loans is waived. The SBA’s guaranty fee and annual servicing fee are also waived, as is the requirement that the business is not able to access credit elsewhere. So long as a business uses PPP loan proceeds for the purposes described in D. above, the loan will be nonrecourse to the business’ shareholders, members and partners.

How to obtain a PPP Loan

PPP loans are made by SBA-certified lenders (over 800 financial institutions currently), in all 50 states, through delegated authority from the SBA. In addition, the SBA Administrator and Secretary of Treasury may further authorize additional lenders to join the program, as needed. SBA-certified lenders simply need to verify that a small business was in operation on February 15, 2020, and paid employee salaries and payroll taxes or paid independent contractors, as reported on Form 1099- MISC, for eligibility in the PPP. Thus, the process should be relatively simple.

Regulations Expected Soon

The SBA is required to issue regulations within 15 days after the enactment of the CARES Act. Once the SBA publishes regulations for the PPP application process, Arent Fox will be able to advise and help businesses apply for PPP loans. Following the release of these regulations, Arent Fox will provide additional analysis and guidance.


The Department of Labor Issues New Guidance Explaining Paid Sick Leave and Expanded Family and Medical Leave Under the Families First Coronavirus Response Act


On March 24th, the Department of Labor’s Wage and Hour Division issued its first round of guidance regarding the Families First Coronavirus Response Act.

You’ll find it here. Yesterday, it issued round II.

The new guidance includes two new posters, one for federal workers and the other for all other employees. Posting them will satisfy the FFCRA’s mandate that employers tell employees about their rights under the law.

The new guidance also includes questions and answers about the posting requirements.

And, it includes a field assistance bulletin that describes the Wage and Hour Division’s 30-day, limited moratorium on enforcing the statute.

Here are some of the key takeaways:

  • Each covered employer must post an FFCRA notice in a conspicuous place at the workplace. Employers may satisfy that requirement by e-mailing or direct mailing the notice to employees, including new hires, or posting the notice on an employee information website.

  • For now, the notice need not be posted in multiple languages. The English version will suffice.  But, the Department of Labor is translating it into other languages.  Employers should monitor the Wage and Hour Division’s website to remain up to date with the Division’s notice requirements.

  • Since the FFCRA applies only to current employees, employers do not have to give the notice with job applicants or employees who have been laid off.

  • Covered employers must post the notice, even if state or local law is more demanding than the FFCRA.  

  • If employees daily report to the employer’s main office and then depart to work at other locations, if employees can easily see the notice at the main office, the employer need not display it at the other locations.

  • If employees report directly to the site at which they work, not the employer’s main office, the employer should post all required federal notice notices at each worksite, even if the buildings are located in the same general vicinity, such as in an industrial park or on a campus.

  • If an employer has breakrooms on each floor and a main lunchroom, the employer may post the notice in the lunchroom, if all employees regularly visit it. If not, the employer must post the notice in each break room, in another location, or other locations at which employees on each floor can easily see it.

  • Between March 18, 2020 and April 17, 2020, the Department of Labor will bring no FFRA enforcement actions against employers that have made reasonable, good faith efforts to comply with the statute.  To fall within this safe harbor,

    • The employer must remedy its violations, including by making all affected employees whole as soon as practicable;

    • The violation must not be “willful”; and

    • The employer must commit, in writing, to the Department of Labor that the employer will comply with the FFCRA in the future.

  • If the employer (i) willfully violates the Act; (ii) fails to commit, in writing to comply with it in the future, or (iii) fails promptly to remedy the violation, the Department, reserves its right to exercise its full enforcement authority.

  • After April 17, 2020, Department of Labor will fully enforce the FFCRA, as appropriate and consistent with applicable law.

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For Further Information:


Bill Long– President & CEO, MEMA 

Phone: +1.919.406.8813 |


John Chalifoux – President & COO, MERA

Phone: +1.248.750.1280 |


Julie Fream – President & CEO, OESA

Phone: +1.248.430.5963 | Email:


Tim Kraus – President & COO, HDMA

Phone: +1.919.406.8835 | Email:


Paul McCarthy – President & COO, AASA

Phone: +1.919.406.8812 | Email:


Ann Wilson – Senior Vice President, Government Affairs, MEMA

Phone: +1.202.312.9246 |

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