On March 30, 2020, the Department of the Treasury published guidelines and procedures for passenger and cargo air carriers (together, “Air Carriers”) seeking relief under the recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act. The Act, which provides significant relief to Air Carriers and aviation employees in the wake of the economic fallout from the coronavirus (COVID-19) pandemic, ordered the Secretary of the Treasury (together with the Department of the Treasury, “theTreasury”) to provide guidance in assisting eligible businesses in applying for (i) loans pursuant to the Act, and (ii) payroll support to enable the continued payment of employee wages, salaries, and benefits. In this Client Alert, we summarize both theProcedures and Minimum Requirements for Loans(“Air Carrier Support Guidelines”) as well as theGuidelines and Application Procedures for Payroll Support(“Payroll Support Guidelines”) released by the Treasury.

 

 

One of the key provisions of Title IV of the Act provides $500 billion to support “Eligible Businesses.” The Act defines Eligible Businesses as both passenger and cargo air carriers and businesses that have not otherwise received adequate economic relief in the form of loans or loan guarantees under the Act. 2 The aggregate amount of the loans to which the recently released Air Carrier Support Guidelines apply is allocated as follows:

 

• $25 billion in loans and loan guarantees for passenger air carriers;

• $4 billion in loans and loan guarantees for cargo air carriers; and

• $17 billion in loans and loan guarantees for businesses critical to maintaining national security.

 

Borrowers seeking relief under these allocated amounts will be able to apply for a loan directly from the Treasury, which will disburse the loan funds directly to approved borrowers.

 

Note, however, that the Air Carrier Support Guidelines do not apply to the $454 billion earmarked for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to Eligible Businesses, states, and municipalities (referred to as “4003(b)(4) Relief” in our previous Alert, “Congress Provides COVID-19 Relief to Airlines and Aviation Workers”).

 

 

The Air Carrier Support Guidelines list the following entities as eligible to apply for the loans and loan guarantees listed above: