On March 26, 2020, the Senate approved a roughly $2 trillion stimulus package—the biggest economic stimulus in recent U.S. history—in response to the COVID-19 pandemic. This economic relief provides expanded protections for American families, workers, and businesses affected by the public health and economic crisis.

The key measures included in the package are:

  • Bailouts for distressed companies. A $500 billion fund controlled by the Federal Reserve will be available for a government lending program directed at distressed companies. Of this total amount, $46 billion is set aside for industry-specific loans, including $25 billion for passenger airlines, $4 billion for cargo air carriers, and $17 billion for businesses critical to national security.
  • Small business protection. A $350 billion fund will be available in support of small businesses. Our colleagues in the public policy group, Pablo E. Carillo, Kirk D. Beckhorn, Karen R. Harbaugh, and Brandon C. Roman, have prepared a client advisory that describes small business programs provided under all three phases of COVID-19 relief legislation. The relief includes new SBA loan programs, which are detailed in the client advisory.  Significantly in the bankruptcy arena, if the Coronavirus Aid, Relief, and Economic Security (CARES) Act is enacted, the threshold allowing businesses to take advantage of the streamlined bankruptcy protections available to small businesses will be raised from roughly $2,725,625 to $7,500,000.
  • Direct payments to taxpayers. Taxpayers with incomes up to $75,000 per year will receive $1,200 in direct payment, before phasing out at those earning more than $99,000.  Families will receive an additional $500 per child.  These payments are excluded from the definition of “income” in the Bankruptcy Code for chapters 7 and 13.
  • Expansion of unemployment benefits. Jobless insurance will be extended by 13 weeks and include a four-month enhancement of benefits. Individuals who are typically excluded from unemployment benefits (e.g., independent contractors) may be eligible for benefits.
  • Grants for healthcare providers. A new grant program of $100 billion will be created in support of healthcare providers.

The stimulus package presents businesses with new avenues for obtaining capital and seeking remedies in the current unprecedented climate. However, it is important to plan in order to secure the full benefits of the new stimulus.  Thoughtful restructuring strategies are essential to implement deployment of the funds in the most impactful way. At a minimum, in order to fully appreciate the benefits of the stimulus and to minimize loss and volatility, companies need to enter this phase of the crisis with a plan for how they can integrate stimulus relief into a long term strategy that will help them navigate this crisis and emerge on the other side in the best possible financial condition.

New Projections

It is critical to prepare operating cash flow projections that reflect the realities that businesses now face in the midst of the COVID-19 pandemic. Projections that take into account the new assumptions, forecasts, and business plans are essential to make sound operational and management decisions. Further, in these uncertain times, it is especially important to frequently update projections—sometimes weekly.

Develop a New Financial and Operating Plan

Businesses should review existing credit facilities and develop strategies to proactively mitigate risks of breach and default. Businesses should also identify unencumbered assets that they could use in securing additional financing, as well as to begin discussions with lenders whose loan documents require lender consent to incur additional indebtedness.

Retaining Legal and Financial Advisors

Professional advice is critical for  managements’ exercise of duty of care and loyalty to the company and its stakeholders. It is also necessary to manage financial disclosures required by regulators and oversight bodies, such as the Securities and Exchange Commission. Furthermore, while management may be very skilled at “business as usual,” restructuring professionals can help guide management through times of crisis that many businesses now face. A business’s consultation with legal and financial advisors also lend credibility to its operations and finances.


The stimulus package, which has had overwhelming bipartisan support, has passed both the House and the Senate and President Donald Trump has indicated that he will sign it into law. In anticipation of the new avenues of capital and remedies being made available, management should take proactive steps to retool and reboot their businesses. The new loan and loan guarantee opportunities will only benefit companies to the extent that management, with the help of legal and financial professionals, are able to restructure the companies’ operations and finances to weather the effects of the COVID-19 pandemic.