This update is the first in a series as we track developments in the implementation of the Paycheck Protection Program (the “PPP”), a $349 billion SBA-guaranteed loan program promulgated under the CARES Act. For more information on the PPP, please see the webinar we hosted with the Association of Corporate Counsel and our prior client alert.

Since our last client alert, we note the following updates and market observations in respect of the PPP:

•  Federal Reserve Program: On April 6, 2020, the Federal Reserve announced that it will establish a facility to provide term financing under the PPP. The facility could take several forms, either making outright purchases of those loans once banks have extended them, or providing funding to the banks to help them lend. More details will be released this week. This is a significant development for eligible applicants that do not have banking relationships with existing SBA-approved lenders.
• Application Processing: While many lenders have started processing and approving PPP loan applications, others are awaiting further guidance from the SBA with respect to lending requirements and lender liability issues.
• Application Form: Last week, we reported that the SBA issued an updated application form. Many lenders are supplementing the form with additional reporting requirements, particularly with respect to the issues of ownership (including foreign ownership) and affiliation.
• Florida-Specific Relief: On April 6, 2020, the Governor of Florida issued an emergency order suspending the levying of stamp taxes on promissory notes and other written instruments issued by borrowers in respect of PPP loans. Stamp taxes, which would otherwise be payable at a rate equal to $0.35 per $100 principal amount of promissory note (subject to a $2,450 cap), are not eligible uses of proceeds under the PPP, and would have had to be funded by borrowers directly.