NAFA member, GKG Law, shares the latest on the CARES Act.
On March 25, 2020, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion stimulus bill. The House of Representatives is expected to approve the legislation, and President Trump has indicated he will quickly sign the bill into law. In addition to general loan programs for small and mid-size businesses that are made available, the CARES Act contains provisions that will benefit general aviation specifically. The business aviation community should take note of the following provisions included in the CARES Act:
- Relief from the 7.5% air transportation federal excise tax for general aviation commercial operations (including flights operated under FAR Part 135), and from the commercial fuel tax through December 31, 2020 (This will not apply to amounts paid for transportation on or before the date of enactment of the CARES Act.);
- Loans and grants to passenger and cargo air carriers, including
- $25 billion in direct loans and loan guarantees for FAR Part 135 Operators providing passenger operations and an additional $25 billion for wages, salaries and benefits for employees;
- $4 billion in direct loans and loan guarantees for FAR Part 135 Operators providing air cargo operations and an additional $4 billion for wages, salaries and benefits for employees;
- $25 billion in loans and loan guarantees for Part 145 maintenance facilities;
- $10 billion for airport grants, with $100 million specifically allocated to general aviation airports.
Note that companies receiving loan and loan guarantees under the CARES Act will be subject to certain requirements, such as maintaining March 24, 2020 employment levels to the extent practicable through the end of September and limits on employment level cuts, limits on executives’ compensation and stock buybacks, and the Department of Transportation would have authority until March 1, 2022 to order any carrier accepting federal assistance to maintain certain air routes.
Please do not hesitate to contact a member of our Business Aviation team with your CARES Act questions or concerns in the days to come.
This article was originally published by GKG Law on March 26, 2020.