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South Carolina governor calls on residents to stay-at-home and practice social distancing
On April 6, South Carolina Governor Henry McMaster issued an executive order limiting social interaction and calling on citizens to stay in their residences when not conducting essential business or activities. The order defined essential businesses to include activities operations or services identified by the United States Cybersecurity and Infrastructure Security Agency in its March 28, 2020 memorandum, which includes financial services. The order went into effect at 5:00 p.m. on April 7.
Massachusetts regulator suspends lending limits for PPP loans
On April 6, the Massachusetts Division of Banks issued guidance to state-chartered banks and credit unions indicating that it will not make adverse regulatory findings or take enforcement action if a loan made under the Small Business Administration’s Payment Protection Program (PPP) causes the institution to violate legal limits on loans to one borrower or the institution’s internal policy. The division also encouraged institutions to work collaboratively to meet demand for PPP loans, such as instituting referral systems.
Florida issues executive order suspending the assessment and collection of taxation for notes and obligations under the CARES Act
On April 6, the Florida governor issued an executive order suspending the assessment and collection of excise taxes on documents imposed pursuant to Chapter 201 of the Florida statutes for all notes and other written obligations made pursuant to Title I of the CARES Act (the Paycheck Protection Program). The Department of Revenue is directed to issue an emergency order establishing that taxation imposed under Chapter 201 on such notes and obligations is not owed as a result of the suspension.
Arizona governor calls for moratorium on small business evictions
On April 6, Arizona Governor Doug Ducey issued an executive order calling for a moratorium on small business evictions. The order applies to businesses impacted by the Covid-19 crisis and instructs landlords to work with tenants to waive late fees, penalties, and to develop rent repayment plans. In place until May 31, the order does not apply to foreclosure or eviction proceedings initiated before the March 11 declared state of emergency.
HUD announces system to securely deliver case binders electronically for endorsement
On April 6, HUD issued Mortgagee Letter-2020-07 announcing that the FHA is accelerating the deployment of “FHA Catalyst”—a system to securely deliver case binders electronically for endorsement—which is now available. This initiative is in response to issues mortgagees have faced in complying with FHA requirements for the delivery of Single Family Forward and HECM paper case binders as well as issues the FHA has faced in processing such paper case binders in light of the Covid-19 outbreak. The letter provides an overview of FHA Catalyst and instructions on access and use of the platform.
Indiana securities regulator alerts registrants to regulatory relief
The Indiana Secretary of State, Securities Division issued a compliance alert to notify registrants that the division granted relief from fingerprinting requirements associated with registration applications for investment adviser representatives. The division indicated that it may provisionally approve an application for registration without fingerprints, provided the applicant submits fingerprints before June 30, 2020.
New Mexico regulator declares that licensed small loan companies are non-essential
On April 6, New Mexico’s Financial Institutions Division issued notice that businesses operated by companies licensed under the New Mexico Small Loan Act of 1955 are not “essential businesses” for purposes of the state’s stay at home order and must remain closed through April 30.
Mississippi permits remote notarization
On April 6, the governor of Mississippi issued an executive order permitting remote notarizations. To perform a remote notarization under the terms of the order, the notary and the principal must be using two-way audio and visual communication at the time of signing. Additionally, the notary public must reasonably identify the principal, create an audiovisual recording of the act, retain the recording, and ensure that the intended document relates to a matter in Mississippi, among other things. Notaries public intending to perform remote notarizations may use this form to notify the secretary of state.
Federal Reserve encourages participation in SBA and Treasury lending programs
On April 6, the Federal Reserve Board (Fed) sent a letter to supervision officers at the Federal Reserve Banks encouraging supervised financial institutions to participate in programs offered by the Small Business Administration and the Treasury Department under the CARES Act. These programs include (i) the Economic Injury Disaster Loan program under Section 7(b) of the Small Business Act, which offers financial aid to small businesses to compensate for economic loss resulting from Covid-19; and (ii) the Paycheck Protection Program, which offers loans—subject to forgiveness pending certain conditions—to incentivize qualified small businesses to retain their employees throughout the Covid-19 pandemic. The Fed also reminded supervised institutions that prudent use of these programs will not receive criticism from examiners.
Treasury and SBA release additional details on PPP, including Affiliation Rules
On April 2, the Small Business Administration (SBA) released an Interim Final Rule (13 CFR Part 121). This Interim Final Rule supplements the Initial Rule with additional guidance regarding the application of certain affiliate rules applicable to SBA’s implementation of the Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security Act. Comments on the Interim Final Rule must be received 30 days after publication in the Federal Register.
The Treasury Department also issued Affiliation Rules Applicable to U.S. Small Business Administration Paycheck Protection Program, which states that “[f]or purposes of determining the number of employees of an applicant to the Paycheck Protection Program, the applicant is considered together with its affiliates.” This guidance details the affiliation tests applied to affiliated companies.
Additionally, the SBA, in consultation with Treasury, issued Paycheck Protection Program Frequently Asked Questions that will be updated on a regular basis. The first question discusses whether lenders must replicate borrowers’ calculations of the dollar amount of average monthly payroll costs.
Please see Buckley’s March 30 Special Alert for additional information on the program, as well as the firm’s dedicated SBA page, which includes additional SBA resources.