Under Title IV, Section 4003 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), eligible businesses can seek loans from the Secretary of the Treasury to help overcome the financial hardships faced as a result of the Coronavirus Pandemic. However, in doing so, businesses may be forced to forfeit the right to make certain business decisions, making their livelihood more questionable than today. 

The following requirements to be eligible for relief under the Act should be carefully considered and analyzed:

• Not only must a business use the funds it receives to retain at least 90% of its workforce that existed as of February 1, 2020, it must do so at full compensation and benefits until September 30, 2020. Businesses that are scraping by but have let members of their workforce go since February 1, 2020, may be required to bring individuals back into the fold. This requirement could make obtaining relief riskier than weathering the storm with a lean team willing to make the sacrifices necessary to keep a small business alive.

• Not only must a business be created or organized in the United States and have the majority of its employees based in the United States to be eligible for support, it must certify that it will stay that way for an extended period of time—that it will not outsource or offshore jobs during the loan period or two years thereafter. With the current state of the economy, the cost of continuing to do business is difficult to predict today, much less more than two years out. Agreeing to this limitation may get a business through the Pandemic, but it may also put it out of business thereafter.

• Not only must a business certify that it will not abrogate existing collective bargaining agreements with labor unions to be eligible for support, it must certify that it will “remain neutral” regarding current or future union organizing activity for the term of the loan. What the economy will do tomorrow is unpredictable. However, to access assistance (1) businesses must agree not to try and negotiate current union agreements even if necessary to have a fighting chance to survive based on future circumstances and (2), if a business’s workers are not unionized, it must agree not to combat efforts to unionize in the future—terms, limitations, and costs unknown.

The handcuffs that come with the relief provided to businesses under the CARES Act may actually give businesses less of a chance to survive. Indeed, they take many decisions out of the hands of small business owners. Businesses should carefully evaluate the CARES Act before seeking relief. A complete summary of the CARES Act can be found here.

For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the websites of the CDC and the World Health Organization. 

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