Trésor Publishes Application for Business Loans Essential to Maintaining National Security | Vinson & Elkins LLP
The US Department of the Treasury issued a Web application for loans under the $ 17 billion National Security Business Lending Program established by the CARES Act. The Treasury also provides a application form template enable potential borrowers to prepare the required information. Loan applications must be submitted no later than 3:00 pm EST on May 1, 2020. Applications received after this time may not be considered.
To apply for the loans, businesses are required to submit corporate and financial information, including:
- Company and ownership structure;
- Debt, lines of credit, other significant debt and credit ratings;
- Assets, available security, equity;
- Income and expenses in 2019 and the first quarter of 2020;
- Financial plans detailing the need and intended use of loan funds; and
- Descriptions of US operations.
The app also searches for information on the number of employees based in the US and overseas as of March 24, 2020 and anticipated job changes. The CARES Act requires a borrower to maintain employment levels from March 24, 2020 to September 30, 2020, to the extent possible, and not reduce employment levels by more than 10%.
An applicant is required to submit “evidence based on market conditions, the circumstances of the borrower, or relationships with existing or potential creditors that credit is not reasonably available to the borrower elsewhere”. The CARES Act requires the Secretary of the Treasury to determine that “credit is not reasonably available” to the applicant before granting a loan under the $ 17 billion program.
In guidelines released on April 10, 2020, the Treasury defined “businesses essential to maintaining national security” as those that execute DX priority contracts or operate under valid top-secret facility clearances. The application includes questions on these eligibility bases. Additional companies may be considered eligible for loans based on recommendations and certifications from the Secretary of Defense or Director of National Intelligence, along with decisions of the Secretary of the Treasury. Although this basis of eligibility is mentioned in the application, no information is provided on the process of obtaining the necessary recommendations, certifications and determinations. It is still unclear, for example, if and how a potential candidate would initiate the process. Consult our alert on eligible companies and loan conditions here.