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The CARES Act: What Midsize Business Owners And Not-For-Profit Organizations Need To Know




The CARES Act: What Midsize Business Owners And Not-For-Profit Organizations Need To Know

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (the “CARES Act”). The CARES Act implements an important source of liquidity for midsize business owners and not-for-profit organizations—the Coronavirus Economic Stabilization Act of 2020 (“CESA”). Under this initiative, midsize businesses and not-for-profit organizations with 500 to 10,000 employees can receive low-interest loans to provide a much-needed cash infusion to help endure financial uncertainties created by COVID19.2

I.Overview of the Coronavirus Economic Stabilization Act of 2020

CESA authorizes lenders to provide loans to eligible businesses and not-for-profit organizations that have incurred or expect to incur losses directly or indirectly as a result of COVID-19. The CARES Act allocates $500 billion to this program. $46 billion of this amount is earmarked for specific industries,3 and $454 billion, and any amount remaining from the $46 billion, will be available to eligible businesses and not-for-profit organizations.4 The loans will have a maximum maturity of five years and a maximum interest rate of 2.00%. Loan payments will be deferred for at least six months. These loans are intended to be used to maintain the borrower’s workforce at 90%, at full compensation and full benefits, until September 30, 2020. Furthermore, the borrower must intend to restore at least 90% of the workforce that existed as of February 1, 2020, and all compensation and benefits to workers within four months after the date in which the Secretary of Health and Human Services determines that the public health emergency no longer exists. Unlike other programs under the CARES Act, forgiveness for loans under CESA is expressly prohibited.

II. Certifications Required by Applicants for Loans Under CESA

To qualify for a loan under CESA, midsize business owners and not-for-profit organizations must certify that:5

1. the uncertainty of current economic conditions makes the loan necessary to support its ongoing operations

2. the applicant intends to maintain its workforce at 90%, at full compensation and full benefits, until September 30, 2020;

3. the applicant intends to restore at least 90% of the workforce that existed as of February 1, 2020 and all compensation and benefits to workers within four months after the date in which the Secretary of Health and Human Services determines that the public health emergency no longer exists;

4. the applicant is domiciled and organized or created in the United States or under the laws of the United States;

5. the applicant has significant operations and a majority of its employees in the United States;

6. the applicant has not received adequate economic relief in the form of loans or loan guarantees under a different provision of the CARES Act; and

7. the applicant is not a debtor in a bankruptcy proceeding.

III. Certain Restrictions on Borrowers That Receive Loans Under CESA

Any business or not-for-profit organization that receives a loan under CESA must comply with the following after receiving the loan.6

1. For the term of the loan, a borrower must remain neutral in any union organizing effort.

2. For the term of the loan, a borrower must not:

a. pay a dividend; and

b. repurchase any publicly traded security of the business or its parent, unless there existed a prior contractual obligation before March 27, 2020.

3. For the term of the loan and for two years after the loan is repaid, a borrower must not:

a. outsource or offshore jobs; and

b. abrogate collective bargaining agreements.

Additional guidance is expected from the Treasury Department. Businesses and not-for-profit organizations are susceptible to closures and slowdowns due to restrictions on gathering, stay-at-home orders, loss of consumer income, and illness. This program under the CARES Act is intended to provide them and their employees a way forward in these uncertain times.


1 For information on the low-interest rate loan programs available to small businesses and not-for-profit organizations with fewer than 500 employees, see our memorandum “The CARES Act: What Small Business Owners and Not-for-Profit Organizations Need to Know,” found here.

2 Businesses that qualify for this program may also be eligible for an employee tax retention credit. For more information, see our memorandum “Employee Leave Provision Under CARES Act and FFCRA,” found here.

3 These industries include passenger air carriers, eligible businesses certified to perform inspection, repair replace or overhaul services, ticket agents, cargo air carriers, and businesses critical to maintaining national security.

4 Section 4003(b)(4) of CESA authorizes these funds to be used for loans provided by financial institutions and for loans or primary and secondary credit facilities created by the Federal Reserve for eligible businesses, not-for-profit organizations, states and municipalities. This memorandum focuses on loans available to midsize businesses and not-for-profit organizations that are to be provided by financial institutions. It does not discuss the programs created by the Federal Reserve, including the Main Street New Loan Facility, or funding for other eligible businesses, states, or municipalities. The Federal Reserve’s programs are described in our memorandum “Federal Reserve Announces up to $2.3 Trillion in New Lending Programs in Support of Economy,” found here.

5 Sections 4003(c)(3)(A)(ii); 4003(c)(3)(D); 4002(4)(B).

6 Section 4003(c)(3)(D). Additional certifications and restrictions apply to loans provided under Federal Reserve programs and facilities, such as limitations on certain employee compensation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ms Helene R. Banks
Cahill Gordon & Reindel LLP
80 Pine Street
New York
NY 10005-1702
Tel: 212701 3000
Fax: 212269 5420
E-mail: [email protected]

© Mondaq Ltd, 2020 – Tel. +44 (0)20 8544 8300 –


Need Income? Here Are 8 Safe Stocks That Yield More Than 2.5%




Need Income? Here Are 8 Safe Stocks That Yield More Than 2.5%

With interest rates at all-time lows, it is becoming increasingly difficult for investors to earn a decent yield in today’s environment. Savings accounts pay a little more than 1% and Treasurys pay even worse.

For seniors or retirees looking for income, there are a handful of companies that have been paying a consistent dividend for more than 100 years that also have a yield higher than 2.5%.

Here are eight companies to take a look at:


Symbol: KO
Dividend Yield: 3.6%

Coca-Cola is the newest addition to the list, with 2020 marking the 100th year that the company has paid a dividend. The company also announced in February that it was increasing the quarterly dividend, making it 58 straight years where the payout has increased. Even with health trends shifting away from sugary drinks, the company has a robust product lineup. It has also been expanding into new beverage lines like coffee and energy drinks.


Symbol: CB
Dividend Yield: 2.9%

Chubb is an insurance company based in Switzerland that primarily writes policies for property and casualty, accident, health, life and reinsurance and is the largest publicly traded property and casualty company in the world. In addition to paying a dividend for more than 100 years, the company has also raised its payout to shareholders for 27 consecutive years.

General Mills

Symbol: GIS
Dividend Yield: 3.2%

You probably recognize General Mills’ brands every time you head to the grocery store. They own brands like Cheerios, Wheaties, Betty Crocker, Pillsbury, Haagen-Dazs and many more. The company has been paying out a dividend for more than 120 years and have increased that payout for 15 straight years.


Symbol: CL
Dividend Yield: 2.5%

Another company with plenty of household brand recognition, Colgate-Palmolive owns brands like Colgate, Palmolive, Speed Stick and Tom’s of Maine. The company has paid out dividends for 125 years and has raised its dividend consistently for the last 57 years.

Procter & Gamble

Symbol: PG
Dividend Yield: 2.8%

The company owns iconic brands like Pampers, Tide, Bounty, Charmin, Gillette, and Head & Shoulders. It has been paying a dividend for more than 100 year and has raised that dividend every year for the last 63 years.

Johnson Controls

Symbol: JCI
Dividend Yield: 3.6%

Based in Cork, Ireland, the company provides fire, HVAC and security systems for buildings. The company has been paying a dividend to shareholders since just after it was founded in 1887, a streak of 133 years.

Consolidated Edison

Symbol: ED
Dividend Yield: 4.3%

Starting way back in 1823 as the New York Gas Light Company, Consolidated Edison provides gas, electric and steam power to New York City and Westchester County, NY. The company has a long history of paying dividends to shareholders dating all the way back to 1885, a streak of 135 years.


Symbol: XOM
Dividend Yield: 7.7%

The massive energy company started as two spinoffs of John D. Rockefeller’s Standard Oil company, Exxon and Mobil. The two companies merger in 1998, but investors in the companies have been receiving consistent dividend payments since way back in 1882.

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Social Media Stocks Slip As Trump Issues Executive Order




Social Media Stocks Slip As Trump Issues Executive Order

Social media stocks slipped yesterday after President Trump signed an executive order granting the government broader authority to crack down on social media companies. Twitter fell 4.45%, Facebook dipped 1.61% and Google’s parent company Alphabet dropped 0.08%. Twitter took the biggest hit because Trump said if the company doesn’t operate honorably, he hinted he would consider shutting the company down.

Trump says social media companies have gained “unchecked power” and have taken on the roles of editors and publishers of the content on their websites. His executive order would remove their “liability shield” if they engage in censorship.

What is Section 230?

Section 230 allows tech companies to moderate user-generated content on their site without becoming legally liable for it as a publisher typically would.

The law allows companies to engage in “good Samaritan” moderation of “objectionable” material. This, then, comes without the companies receiving a publisher or speaker treatment. Section 230 allows platforms like Twitter, Facebook and Google’s YouTube to take down terrorist content. It also allows them to track and take down harassing messages while still enjoying other legal protections.

What the law doesn’t allow, and what Trump says the platforms are doing, pertains to selectively moderating what messages users see to silence conservative voices.

“They’re doing things incorrectly, they have points of view,” Trump said at the White House. “My executive order calls for new regulations under Section 230 of the Communications Decency Act to make it that social media companies that engage in censoring or any political conduct will not be able to keep their liability shield. That’s a big deal,” he also stated.

Trump’s Order

Trump said the order would also prevent taxpayer dollars from going to any company that engages in what Trump referred to as deceptiveness. This is in addition to limiting these protections for companies that acted with bias.

Trump’s executive order comes just days after Twitter added a fact-checking feature. The social media site added the new feature alongside two of the President’s tweets about mail-in ballots and fraud. After Twitter added the fact-checking features, Trump then accused the company of engaging in “political activism.”

He also tweeted, “So ridiculous to see Twitter trying to make the case that Mail-In Ballots are not subject to FRAUD. How stupid, there are examples, & cases, all over the place. Our election process will become badly tainted & a laughingstock all over the World. Tell that to your hater @yoyoel.”

“Big Tech is doing everything in their very considerable power to CENSOR in advance of the 2020 Election,” the president also said Wednesday night — on Twitter. “If that happens, we no longer have our freedom. I will never let it happen! They tried hard in 2016, and lost. Now they are going absolutely CRAZY. Stay Tuned!!!” he then added.


Facebook CEO Mark Zuckerberg said that his company is taking a different approach to moderating content on his social media platform.

“I just believe strongly that Facebook shouldn’t be the arbiter of truth of everything that people say online. Private companies probably shouldn’t be, especially these platform companies, shouldn’t be in the position of doing that.”

The interest in updating Section 230 to remove the liability shield for publishers isn’t just a goal for Republicans. It actually has bipartisan support.

This past January, Democratic nominee Joe Biden proposed revoking Section 230 completely. “The idea that it’s a tech company is that Section 230 should be revoked, immediately should be revoked, number one. For Zuckerberg and other platforms. It should be revoked because it is not merely an internet company. It is propagating falsehoods they know to be false.” Biden also never responded to follow-up questions about this statement.

Even former Democratic candidate also Bernie Sanders supported the idea, adding, “Tech giants and online platforms should not be shielded from responsibility when they knowingly allow content on their platforms that promotes and facilitates violence.”

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Mark Cuban Proposes ‘Use it Or Lose It’ Debit Cards to Boost Recovery




Mark Cuban Proposes ‘Use it Or Lose It’ Debit Cards to Boost Recovery

Mark Cuban hasn’t been shy about voicing his ideas to get our country back on the road to recovery. His latest proposal is that the government issue debit cards to US households to help businesses by boosting consumer spending. The caveat to Cuban’s plan is that the debit cards have a “use it or lose it” feature.

“… I think we need to do a debit card program where we give money literally to each household and make it ‘use it or lose it,’ whether it’s $1,000, or $1,200, or whatever that number is, every couple of weeks and say, ‘You have X number of days to use this debit card, or you lose the money that’s been deposited on there.’”

Cuban came up with the plan. As he said, “we’ve got to get to a scenario where consumers have enough confidence to go out there and spend money… the primary reality is no business can survive without sales. And two-thirds of the economy is consumer-generated demand.”

Without an increase in business, many businesses can’t afford to re-hire their employees. Even if they could, some are receiving more money from their unemployment benefits than they are from working.

Cuban’s Plan

Cuban says his plan is a “perfectly timed stimulus program” and “…by doing that, and timing it right, that’s going to create demand for these companies so they can afford to bring their employees back after they’re off of all that unemployment CARES enhancement.”

The CARES Act became law in March. It added an extra $600 weekly payment on top of the amount someone receives under state law. Those additional benefits will end in July unless the government extends it.

Cuban has also proposed that the government start a federally-guaranteed jobs program. He said these should give people “confidence in their jobs” and help start the rehiring process.

“We’re going to have to have a transitional, not permanent transitional federal jobs program,” he said. He also included jobs like the ones created during the pandemic to track and treat COVID-19 patients.

“And so we’re going to need to hire people, millions of people, you know, preferably for testing, tracing, tracking, supporting vulnerable populations, long-term care, you know, giving people jobs that they know, are stable, because that gives them the impetus to spend money,” Cuban added.


While Cuban’s plan would absolutely boost consumer spending, Scott Baker, an associate professor of finance at the Kellogg School of Management at Northwestern University says it won’t help every industry.

“Some industries you won’t be able to stimulate this way,” said Baker. He also said that the plan cant help the tourism industry. He said this because, even with extra money in their pockets, Americans aren’t travelling.

Baker also says that during economic uncertainty, most Americans will delay durable goods purchases, like electronics, appliances and vehicles.

Cuban, who has become more vocal about his ideas to help the country recover from the coronavirus pandemic, also hasn’t officially ruled out a 2020 presidential run.

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