Implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. Law No. 116-136) continues, with the Treasury Department late April 6 releasing updated Small Business Administration (SBA) guidance for borrowers and lenders participating in the Paycheck Protection Program (PPP). The guidance is in the form of updated Frequently Asked Questions (FAQs).

The FAQs may leave some issues unclear and raise additional questions, but they continue to address application of the program to startups in light of affiliation rules that treat businesses under control of a single investor as one entity, and conditions under which the SBA will deem a minority shareholder in a business to control the business. The issue has been a focus of significant press attention, including in the Wall Street Journal. Today's paper featured an editorial on several issues under the PPP, noting that affiliation rules exclude small companies with common ownership that have more than 500 employees combined, and that both House Speaker Nancy Pelosi (D-CA) and Republican leader Kevin McCarthy (R-CA) "say these rules should be waived for venture-backed startups." The April 7 Washington Post included a detailed article on how private equity firms are pushing to qualify for programs including the PPP, and quoted Senate Finance Committee Ranking Member Ron Wyden (D-OR) as saying Democrats will have that "on our radar" and don't necessarily agree they should qualify for benefits aimed at small businesses.

Senator Marco Rubio (R-FL), the main author of the PPP portion of the CARES Act, tweeted last night that the FAQs "address many of the questions lenders have grappled with over the first two days of the program." He said this morning that the PPP will get better — and move past inevitable glitches with the rollout of a "massive emergency program" — as the SBA portal adds capacity and new lenders enter the program." Also, Congress already discussing how to add more funding," he tweeted.

Regarding additional congressional action, Senate Democratic leader Chuck Schumer (D-NY) told reporters by teleconference yesterday, "I believe we are going to definitely need to do a COVID 4. There are many needs that are unmet, and the problem may be of greater — even greater magnitude than people thought a few weeks ago. And so, I do think we have to come back relatively soon." He said he pushed for more money for states in the CARES Act, "and we need to get more, and we're fighting to get more in the next COVID 4." Senator Schumer said he has been in contact with Speaker Pelosi regarding congressional bill #4. "All I can tell you is I think we're going to definitely need a COVID 4 and I think it's going to have to be big and bold because the problem is so huge," he said. He also said he has spoken with White House chief of staff Mark Meadows regarding the need for President Trump to "appoint a senior military official as czar to oversee both production and distribution of desperately needed medical supplies, equipment to the workers on the ground and even of how personnel are distributed."

On MSNBC last night, Speaker Pelosi said, "we know already that [with] the acceleration of the pace of this virus, and this assault, not [only] on the lives but the livelihood of the American people, that we must do more, so we're preparing for CARES 2 already." The April 7 Washington Post cited Speaker Pelosi — who has called for additional direct payments to individuals, unemployment benefits, and small business assistance — as having told lawmakers her vision of the next bill would "easily" exceed $1 trillion. The report also cited Senate Majority Leader Mitch McConnell (R-KY) as saying he believes Congress will need to act again to address health care needs, among other things, and reported that Leader McConnell and Speaker Pelosi spoke last week.

EY Alerts, including "Examining key tax provisions in the CARES Act," and other resources are here.

The global EY Tax COVID-19 Response Tracker updated through April 6 is here.

EY Webcasts this week include:

• Tuesday, April 7. Tax in a disrupted market, CARES Act: Navigating the NOL carryback and international tax considerations, 1:00 p.m. ET. Register for this Thought Center Webcast.
• Friday, April 10. Tax in the time of COVID-19 12:00 p.m. ET. Details and registration information forthcoming.

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