Passed in part to support businesses both large and small, across the widest possible range of industries, Congress’ final passage of the $2 trillion-plus Coronavirus Aid Relief and Economic Security Act (CARES) includes numerous provisions that are expected to provide benefit to most companies, including those operating in the natural products and dietary supplement space, according to an industry analysis of the legislation.
Many companies will qualify for the Paycheck Protection Program, which will be administered by the Small Business Administration. The program will distribute $350 billion in short-term loans, with speeded-up origination, and companies with 500 or fewer employees can qualify. Loans can be for up to $10 million, and will be based on how much companies paid employees during the first two months of the year. Interest rates will be capped at 4%. Loans must be used to cover payroll costs, paid sick or medical leave, or rent, mortgage or utility costs.
Importantly, language in the legislation allows for loans to be forgiven if employers hire workers and keep them employed over the term of the loan, meaning companies that get assistance would only be on the hook for interest that has accrued.
Sole proprietors, independent contractors, and others who are self-employed are also eligible for the loan program.
Businesses will apply for loans through lending institutions, as opposed to the SBA or another bureaucratic agency, a detail that is expected to speed deployment of capital.
A 50% refundable payroll tax credit is also part of the package, and available to businesses with fewer than 500 workers. The provision is meant as an incentive for companies to retain their workers.
Companies with more than 500 employees can get loan assistance via a $500 billion carve-out that will specifically be distributed by the Treasury Department, and Secretary Steve Mnuchin. Of that half a trillion, $46 billion is specifically earmarked for the ailing airline industry. Provisions of the bill prohibit publicly traded companies who access the loan money from this new credit facility from buying back stock with the cash.
Many of the bill’s details were summarized and provided by legislative experts with the United Natural Products Alliance (UNPA).
Others in the industry lauded the bill immediately after its passage and signing by the president Friday.
“This is much needed relief for thousands of small and large businesses who make up America’s natural products industry,” Dr. Daniel Fabricant, president and CEO of the Natural Products Association, is quoted as saying in a release. “They have demonstrated how critical they are to our country and our fellow citizens throughout this crisis, and this powerful combination of financial assistance and investment will help keep America strong.”
“The passage of this multi-trillion dollar package is designed to cauterize the hemorrhaging of jobs and cash flow in the American economy, largely inflicted by this unanticipated scourge of a pandemic,” wrote Mark LeDoux, chairman and chief executive officer of Carlsbad, California-based Natural Alternatives International, Inc., in an email. “While some cash flow for businesses, small and large alike, is gratifying, the real help will be coming in the form of delayed tax filings and cash or electronic disbursements of immediate funds to millions of people who have been negatively affected by this outbreak.”
The legislation passed Friday is considered Phase 3, as two other emergency packages were passed and signed into law. In the first bill, FDA received $61 million to facilitate development of medical countermeasures, and devices, therapies and vaccines to combat the virus. FDA will get another $80 million in the third phase legislation, meaning $141 million will have flowed to the key agency in just the past few weeks.
FDA already has temporarily postponed all domestic routine surveillance facility inspections, opting only for inspection assignments evaluated and deemed “mission-critical,” according to the agency.
Many food- and health-related operations have been categorized as “essential,” and allowed to stay open during periods of virus-related business restrictions or broad community lockdowns imposed by state and local authorities.
“This is an extraordinary time—and it is gratifying to see that various governors have declared that producers of food and food supplements/dietary supplements are considered an essential component of the business community, and therefore remain open, with appropriate safeguards to personnel and product being implemented,” LeDoux wrote.