Ever since Congress passed the 2018 Farm Bill and hemp was declassified under federal law as a Schedule I controlled substance, financial institutions have struggled with whether and how to bank the hemp industry. Many bankers simply feared that the distinction between legal hemp (which cannot contain more than 0.3 percent THC on a dry-weight basis) and illegal marijuana placed too high a burden (and cost) on banks to police compliance and too much risk…

The Small Business Administration (SBA) has issued an Interim Final Rule controlling how $349 billion in short-term business loans under the CARES Act will be allocated. While the SBA is seeking comments from the public, the rule is effective immediately to provide immediate relief to businesses affected by the COVID-19 emergency. Applications for lenders and borrowers are available now. The interim rule clarifies—and in some cases contradicts—the text of the CARES Act. But one provision…

Section 1113 of the CARES Act amends certain provisions of the Bankruptcy Code and will apply to the year following the date on which this new law goes into effect. These changes are primarily designed to benefit small businesses and individuals who need to seek bankruptcy protection (and some who have already sought it). Creditors should be aware that the changes may make it easier for debtors to qualify for the bankruptcy cases of their…

No, your eyes aren’t deceiving you. On Thursday, March 26, 2020, the federal banking agencies (i.e., the FDIC, CFPB, FRB, NCUA, and OCC) issued a joint statement encouraging banks and credit unions to offer responsible small-dollar loans to consumers and small businesses affected by COVID-19. Many of us might remember the days of “Operation Chokepoint” in the 2010s (where small-dollar payday lenders were allegedly targeted), but those days are long gone. At least…

In its current form, the CARES Act amends the Small Business Administration’s (SBA) Section 7(a) loan program to encourage banks and credit unions to make small business loans under what is known as the “Paycheck Protection Program.” If passed, the Act would appropriate $349 billion for SBA guaranties to protect lenders against the risk of default, while also easing underwriting hurdles to finance small businesses needing additional funding for existing payroll and operating expenses (including…