Federal, state and local government response to COVID-19 on 4/28/20

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Federal, state and local government response to COVID-19 on 4/28/20

BY THE NUMBERS 

Number of Statewide Cases: 16,588 (+627) 

Marion County Cases: 5,080 (+154) 

Hamilton County Cases: 729 (+9) 

Johnson County Cases: 548 (+10) 

US Cases: 990,135 (+22,550) 

Global Cases: 3M 

Number of Statewide Deaths: 901 (+57) 

Number of Marion County Deaths: 267 (+39) 

US Deaths: 56,386 (+1,448) 

Global Deaths: 212,221 (+4,703) 

Number of Hoosiers Filed for Unemployment: 75,483 as of 4/23/20 

FEDERAL 

SBA Issues "Good Faith" Certification Guidance and Treasury Announces PPP Loan Audit 

As the SBA and participating lenders have transitioned from the first tranche of funding for the Paycheck Protection Program (“PPP”) established by the CARES Act into the second tranche, the Department of Treasury has continued to update its guidance and issue new guidance for borrowers and lenders participating in the program. Some of the recent guidance includes: 

  • • Even though, for purposes of the PPP, the CARES Act suspended the “no credit elsewhere” test defined in Section 3(h) of the Small Business Act and generally applicable to borrowers in the traditional SBA 7(a) loan program, a borrower still needs to certify in good faith that its PPP loan request is “necessary to support the ongoing operations” of the borrower. 
  • • To make a “good faith” certification, borrowers need to take into account their “current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” 
  • • For example, “it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith,” and such a company would need to be able to demonstrate to the SBA its basis for making the certification in good faith. 
  • • A safe harbor for borrowers concerned about whether they can in good faith make this certification provides that any borrower who received a PPP loan previously but repays the loan in full on or before May 7, 2020 will be deemed to have made the certification in good faith. 

In addition, on April 28, 2020, Treasury Secretary Steven Mnuchin stated publicly that all PPP loans in an amount of $2,000,000 or greater will be audited. It is advisable for borrowers who have already received PPP loans or for borrowers who have applied for but not yet received PPP loans to revisit their business analysis, which relates to this certification in light of this new guidance and determine whether it would be advisable to repay previously received loan funds in accordance with the safe harbor or retract an application for funds that have not yet been disbursed. 

House and Senate Differ on Plans to Return to DC 

Leaders of the Democratic-controlled House abandoned plans to return to Washington next week, less than 24 hours after members were told to prepare to meet, while the Republican-led Senate reiterated plans to return. 

McConnell Hints at Possibility of State Funding in Next Round of Legislation 

Yesterday, Leader McConnell acknowledged the next piece of COVID-19 response legislation will most likely include aid for state and local governments whose budgets have been harmed by lockdowns and increased unemployment claims. However, McConnell also indicated he believes such support should be paired with limits on the liabilities of health care workers, business owners, and others as states slowly reopen the economy. The past several weeks have seen a spike in COVID-19 related litigation, a trend that will likely continue into the future. Leader McConnell’s statement exemplifies the increased political complexity of future COVID-19 stimulus legislation. Congress and outside stakeholders have begun to prepare for the development of a substantial fourth legislative package in the coming weeks; however, Republicans and Democrats take different views on the timing and scope of this legislation. 

PPP Resumes With Some Delays 

SBA reopened the Paycheck Protection Program (PPP) yesterday at 10:30 AM. A rush of new applications led to complaints from lenders and borrowers about delays and glitches in the system’s approval process and informational technology architecture. Banking industry groups say last-minute changes in guidance on how to submit applications stymied the process, which reopened after Congress injected billions of dollars in new money for the program designed to help small businesses continue to pay employees during widespread lockdown orders in response to COVID-19. As of 3:30 PM yesterday, SBA said it had processed more than 100,000 PPP loans submitted by more than 4,000 lenders. 

New White House Testing Blueprint 

The White House unveiled a plan yesterday for the federal government to work in partnership with private industry and retailers to assist states in ramping up testing capacity as outlined in the President’s Opening Up America Again Guidelines from earlier this month. The Trump Administration will send all 50 states enough tests to screen at least 2 percent of residents for COVID-19 with the aim of rapidly expanding supplies in the coming weeks as states look to reopen parts of the economy. The plan charts a course for the economy’s reopening based on emerging testing capabilities and states’ abilities to scale up their testing capacity with the assistance of the federal government. According to the overview provided by the White House, by May 1, U.S. retailers will be operating a total of 100 federally supported testing sites in 33 States. 

Some States Move Ahead With Reopening 

Several states this week began the process of lifting lockdown orders in what could be a pivotal stage in the U.S. response to COVID-19. Texas Governor Greg Abbott (R) announced that retail stores, restaurants, movie theaters, and shopping malls may reopen with limited capacity on Friday. In Ohio, Governor Mike DeWine (R) unveiled a more incremental plan that would allow manufacturing work to resume and offices to reopen next week. Despite guidance suggesting states follow strict testing and tracing protocol after meeting various criteria to reopen, several of the states relaxing lockdowns still do not have widespread testing or systems in place to track infections. President Trump will meet with Florida Governor Ron DeSantis (R) today to discuss the Paycheck Protection Program and Florida’s plans to reopen. 

Geographic Inequity of Small Business Aid 

While the second round of Payroll Protection Program loans for small businesses launched yesterday, stark disparities from Round 1 are surfacing, Axios markets reporter Courtenay Brown writes. What's going on: Small businesses in the Midwest, notably Nebraska, got a big share of the loans. But states like New York and California — hit hard by the economic shutdown — came up comparably short. 

  • • Qualifying firms in states like New York and New Jersey are less likely to have long standing relationships with community banks — a factor that seems to have made a big difference in who got a share of the initial $350 billion pot. 
  • • Just 15% of companies based in "the most affected congressional districts" got funds from the PPP program, new findings from the National Bureau of Economic Research show, while "more than 30% of all businesses operating in the least affected congressional districts were able to tap into PPP funding." 
  • • Now that $310 billion more is being doled out, there are fears that the same dynamic will be at work — including early glitches. 

Montana community bankers "were literally sitting up all night waiting for those [SBA] portals to open and were submitting loans within minutes," Brent Donnelly, who heads up Montana’s SBA office, tells Axios. 

  • • Local bankers have a "very vested interest in making sure those businesses in the town survive," says Richard Baier, head of the Nebraska Bankers Association. 

The intrigue: Some small businesses are ditching their banks over PPP loans.

  • • Scott Roy, who runs a small consulting agency in Knoxville, Tenn., tells Axios: "[A] decision you made years ago about who to bank with is now coming back to bite you in the butt." 

What Are Other States Doing? 

AP has compiled reader-friendly summaries of the states already swinging their doors back open, those taking a more gradual approach, and those imposing strict prerequisites for beginning the reopening process. 

STATE 

State Enlists Private Contractor to Boost COVID-19 Testing Dramatically 

The Indiana State Department of Health on Tuesday announced it has reached an agreement with a subsidiary of United Health Group to expand COVID-19 testing dramatically in Indiana. 

The department said OptumServe plans to open 20 testing sites around the state next week that are expected to test 100,000 Hoosiers within 30 days. That’s more than the 87,100 people who have been tested so far in Indiana since the beginning of the pandemic, according to the Indiana State Department of Health. The state said OptumServe will expand to 50 sites by mid-May, allowing up to 30,800 residents to be tested weekly. OptumServe will test any symptomatic resident, close contacts of positive cases or residents of congregate living settings, the state said. The tests will be free to the patient. OptumServe is part of Optum, a division of United Health Group that provides federal health services to the Departments of Defense, Health and Human Services, Veterans Affairs and other organizations. The company said it provided more than 2.9 million health services to 350,000 National Guard and Reserve members across the country last year. Indiana is the second state to sign a COVID-19 testing contract with OptumServe, following California. 

IMPORTANT LINKS 

Links to all executive orders may be found here: https://www.in.gov/gov/2384.htm 

Link to the Stay-At-Home Order FAQ may be found here: https://www.in.gov/gov/3232.htm 

More information may be found at the ISDH website at in.gov/coronavirus/ and the CDC website at https://www.cdc.gov/coronavirus/2019-ncov/index.html.

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