As a result of the unprecedented Corona Virus pandemic, Congress passed bipartisan economic relief legislation.  The components include stimulus payments to individuals, expanded unemployment benefits and coverage, help to small businesses, and more.  The bill is a complex one (over 800 pages) and this post focuses on two Federal loans available for small businesses only.

  1. What is Paycheck Protection Program?

Under the Paycheck Protection Program, certain small business with less than 500 employees are eligible apply for a loan up to $10 million that would help them to keep their employees on payroll.  In terms of the amount of the loan, you can borrow up to 2.5 times the eligible monthly payroll costs. This is a rough estimate though as the loan amount calculation caps the salary amount for employees who earn over $100,000.  To arrive at the loan amount, you can also include 1099 payments as well as owner compensation.

Monthly loan re-payments would not start for 6 months, and the loans do not require collateral or guarantees.  The loan can only be used to make payments for certain expenditures during an 8 week period including payroll, rent, mortgage interest, or utilities.   The full loan amount can be forgiven if certain criteria are met.   Forgiveness can occur if the money was used for the intended purpose, headcount remains the same, and total payroll costs remain the same.  If headcount or payroll costs decrease, this may reduce the amount of forgiveness on the loan.

You can read all the requirements and find out if you could apply for this loan if you click here and here.  Banks will start accepting applications for this loan on April 3, 2020 although many banks do not yet appear ready to accept applications.

I am a foreign national and I own a business in the U.S. Can I apply for a loan under the Paycheck Protection Program?  Can I apply for the Paycheck program if I am on an E-2 visa?

The short answer is Yes.  E-2 visa holders are eligible to apply for the Paycheck Protection loan.  When the first version of the application was distributed by the SBA, only U.S. citizens and Green Card holders were eligible. Thankfully through successful lobbying efforts, the rule was changed to permit E-2 visa holders (and other non-immigrant visa holders) to apply for the loan.  To apply for the loan, there are certifications that must be made also.  While the change in the rules is a great success, it is unclear whether E-2 visa holders will be subject to additional requirements in order to obtain the loan. For example, the latest version of the SBA guidance appears to impose both a guarantee and collateral requirement on these loans for non-immigrant visa holders.  As the program is new, there may still be some details that the Government has to work out.  One thing is certain though….If you do not apply, you will not get any money. Funds are limited also so an early application is prudent.

  1. What is Economic Injury Disaster Loan? What is Emergency Economic Injury Grant?

Certain small business owners can apply for an Economic Injury Disaster Loan and get an advance (the term Grant has also been used but the current wording on the form is Advance) of up to $10,000 if they are suffering substantial economic injury due to the Coronavirus outbreak. This loan provides small business a working capital loan of up to $2 million and the purpose of this loan is to help businesses overcome the temporary loss of revenue. The business owners would first have to apply for the Economic Injury Disaster Loan and then request the Loan advance. This advance should be made available to you within 3 days of a successful application, and our understanding is that the loan advance will not have to be repaid.  This other loan that will be advanced is not forgivable but the interest rates are low with a long repayment term.

You can read all the requirements and find out if you could apply for this loan if you click here and here.

Please note that the Economic Injury Disaster Loan application does not expressly state that you have to be a U.S. citizen or a Green Card holder to apply for this loan. However, it would appear that SBA is not issuing EIDL loans to E-2 visa holders. You can apply for this loan directly on the SBA website and there is an abbreviated application form that takes around 20 minutes to complete.

To assist with loan funding and applications, we have provided some additional information here.  International Legal Expert & Business Continuity Strategist Lauren Cohen (Please note that Ms. Cohen is not an employee of and has no affiliation with Scott Legal, P.C.) is offering a wide range of services related to business pivoting and the coordination of funding and other solutions for business owners across North America from governmental and private resources. You can set up a consultation with Lauren here.   https://bit.ly/fundingsession

Will there be a public charge impact if I apply for this loan? If I apply for a Stimulus loan on an E-2 visa, will there be a public charge impact?

Given the new public charge rule which went into effect on February 24, 2020, many clients are concerned that applying for this loan could be seen as a negative factor in a public charge analysis. Please not though that this type of loan is not listed among the public benefits USCIS specifically considers for the purpose of the public charge analysis. The Public Charge rule also specifically mentions that disaster relief is specifically excluded from the public charge rule and is not one of the benefits considered under the public charge rule. It is likely that this loan would qualify as a “disaster relief” (certainly the Economic Injury Disaster Loan should fall in this category given the name).   As such, the first point here is that the loan would likely not be considered in the public charge analysis at all given the specific exclusions and detail in the rule.

Even if the Government considered these payments under a public charge analysis, the public charge analysis considers many factors and conducts a totality of the circumstance analysis. Given the nature of Covid-19 and how it has impacted everyone, our opinion is that these loans will not impact the public charge assessment unless there are other substantial negative factors (eg. the person is not employed, has a health issue that may be perceived to burden the State, bankruptcy, etc.). Even with the receipt of Medicaid as it relates to Covid-19 treatments, USCIS appears to have relaxed the standard as it relates to Public charge.

Finally, the public charge rule relates to individual people.  Certainly individuals on visas will receive the stimulus check (we do not see a public issue charge there either – see related post by clicking here), BUT in most cases the loans will be granted to companies based on the needs of a business entity.  The rule does also provide benefits to certain self employed individuals, but in many cases the loans will be granted based on the needs of the E-2 company, and will be used to pay salaries and other expenses of the business.  The Supreme Court has clearly stated that companies are separate from individuals.

There is of course a chance a USCIS Officer or a Consular Officer could perhaps always take the fact that you applied for this loan into account in his/her totality of the circumstance analysis, but absent other negative factors, this is not that likely.

I am a Green Card holder and I want to apply for this loan. Will there be a public charge impact?

If you are currently a green card holder and you want to apply for this loan, you could apply and would not have to worry whether it will have any impact on the public charge rule. The public charge rule only applies to people who are applying for a green card, and so if you are currently a green card holder, the public charge rule does not apply to you.

You can find out more about other resources available to small businesses during Covid-19 by clicking here.

You can find key immigration information related to the Coronavirus below: