“Forgivable” Disaster Assistance Loans Could Become Available For Aviation Supply Chain Payroll

Last night, Congressman Raskin’s office called me. We had filed a letter with them asking for assistance for the entire aviation supply chain, including FAA-approved parts manufacturers. Our call last night was an opportunity for me to describe the aviation supply chain, including parts manufacturers, distributors, and repair stations, and the important role that they play in supporting our transportation infrastructure. Martha Sanchez, Congressman Raskin’s Legislative Assistant, told me that she is pretty sure our industry will be covered in the final bill, and asked us to reach out to the Congressman again if we do not feel that the bill is adequate to protect the industry.

Our call happened just before the Coronavirus Relief Bill passed the Senate. The current version of the legislation will go to the House and is expected to be passed tomorrow.

The current bill is said to be 880 pages,and it may be days before we can see the entire 880 page bill (a 247 page version that was introduced a week ago is the only version currently on the US government websites). The bill was passed as H.R. 748, but that was just used as a convenient legislative vehicle: the Senate amended H.R. 748 (a tax bill) by replacing it with the text that had been negotiated by the Senate.

There has been much talk about the payments to individuals, but I am told that the bill will feature about $350 billion in SBA disaster loans for small businesses, and that those loans may be convertible to grants (by being ‘forgiven’) if they are used for certain purposes (like payroll).

Early versions of the bill would have forgiven loans used for payroll.  We are hoping that the final language resembles this proposed language.  The proposed forgiveness formula would be reduced for companies that lay off employees, using a formula that looks like this:

So if your headcount remains the same as a year ago (or is greater) then you could potentially get 100% of disaster assistance loans that you used for payroll ‘forgiven’ and it would thus be turned into a grant.  The proposed version also included reductions if you have reduced wages by more than 25%.  This was an early proposal and a final version of the bill has not yet been voted by the House, so it is still subject to change.

We will keep you updated!

About Jason Dickstein
Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. Since 1992, he has represented aviation trade associations and businesses that include aircraft and aircraft parts manufacturers, distributors, and repair stations, as well as both commercial and private operators. Blog content published by Mr. Dickstein is not legal advice; and may not reflect all possible fact patterns. Readers should exercise care when applying information from blog articles to their own fact patterns.

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