Main Street Lending Program Announced

Last week, the Federal Reserve and Treasury Department launched a new lending program, the Main Street New Loan Facility, which will provide additional liquidity for businesses, including mid-size businesses that were ineligible for PPP loans. The Federal Reserve confirmed in its release announcing the program that PPP loan recipients will also be eligible for Main Street Loans.

Any business with 10,000 or fewer employees or up to $2.5 billion in 2019 revenue is eligible to apply. Businesses can borrow a minimum of $1 million, and the primary purpose of the loans is to fund payroll.

The COVID-19 pandemic has upended the way we live and the way we do business. A Dealer Guide to Safely Operating Your Dealership During a Pandemic aims to assist dealers in maintaining their essential operations while minimizing unnecessary risks. The guide provides information from such reliable sources as the Centers for Disease Control and Prevention (CDC) on keeping employees and customers safe during the pandemic; cleaning and disinfecting dealership facilities and vehicles; and safely handling service and sales operations.
NADA’s Dealership Lifeline Webinar Series Continues This Week

NADA’s efforts to protect dealers during COVID-19 continues with Lifeline Series Webinars next week. Topics include remote working, online sales and a feature on truck dealer issues. Slots fill up quickly so register ASAP.

CARES Act Update

Guidance on calculating the forgivable amount of Paycheck Protection Program (PPP) loans is still being developed by SBA and the Treasury Department. The permitted and forgivable expenditures and documentation relating to them should be closely coordinated with your lending bank. Dealers can estimate the forgivable amount by following a complicated two-step formula. The following generalization is a simplification and should be supplemented with the actual guidance once it is available.

Step One: Determine the "presumed forgiveness amount," which consists of "salary" expenses (in this case "salary" means some but not all of the employer's costs associated with maintaining their payroll), utilities, rent, and mortgage interest expenditures in the eight week period beginning on the date of loan distribution. The "salary" category must make up at least 75% of this amount.

Step Two: The "presumed forgiveness amount" calculated in step one will be reduced if there is a reduction in the number of employees and it will also be reduced by salary or wage reduction in excess of 25%. This is subject to the provision that the reductions in employees or wages during the time period of February 15, 2020 through April 26, 2020 are disregarded as long as the reductions are restored by June 30, 2020. Look to your lender and the coming guidance on the precise rules and processes to make that calculation.

It may be helpful to think of PPP using the following oversimplification: It is a loan in the amount equal to ten weeks of employer's "payroll costs" that can be used for two purposes.

  1. To provide eight weeks of payroll to keep employees working
  2. To provide the equivalent of two weeks of payroll for use on some of the fixed costs associated with keeping the business operational

PPP Resources
KADA will continue to provide updates on critical legislative and regulatory measures as they become available. They will also be posted on