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SMEs “Paycheck Protection Program”. Access by foreign-owned U.S. companies.

Washington, April 10, 2020.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) has introduced a wide range of tools to mitigate the negative effects of Covid-19, ranging from loans and business subsidies and support measures for personal income, from the expansion of the social protection network to higher healthcare costs.

One of the most important measures for small and medium-sized enterprises is the “Paycheck Protection Program (PPP)”. The program allocates USD 350 billion to SMEs employing less than 500 employees in the United States, with the aim of avoiding layoffs and termination of business, while supporting companies in the most acute months of the emergency.

The program provides for companies to access subsidized loans which are expected to be converted into non-refundable grants if: (i) the workforce is not reduced in the period from 15 February to 30 June 2020; (ii) the funds are used to pay workers’ salaries in the eight weeks following disbursement (more information on the actual calculation methods are available on the website of the Treasury Department).

Loans – with a two-year duration, interest rate subsidized at 1% and a maximum amount per company set at 10 million – are made available by the banks and are guaranteed at the federal level by the Small Business Administration (SBA).

The system is easy to access by filling out a form available on the SBA website and provides reduced and simplified checks on the creditworthiness of the beneficiary.

The Federal Reserve, which has already started its own credit support programs, also plans to intervene in support of PPP by purchasing the loans granted from the banks, in order to support their liquidity.

The Small Business Administration (SBA) has informed that even “foreign-owned businesses” can access the program, which is designed to protect US workers regardless of the nationality of the holding company and their permanent residence or not.

Funding requests must be sent through the company’s American bank.

For more information, please call the SBA customer service call center (1-800-659-2955) and consult the program’s internet page.

The Embassy specifies that the above information is of a general nature and provides as a mere guidance. Requests will be verified on a case-by-case basis according to the characteristics of the company. Loan decisions are remitted exclusively to the American authorities.