Business Borrowers Protection Act

I 116TH CONGRESS 2D SESSION H. R. 6549 To prevent the acceleration of the due date of business loans during the COVID–19 national emergency, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 17, 2020 Mr. SHERMAN introduced the following bill; which was referred to the Committee on Financial Services A BILL To prevent the acceleration of the due date of business loans during the COVID–19 national emergency, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Business Borrowers 4 Protection Act’’. 5 SEC. 2. CONSTRUCTION OF LOAN COVENANTS. 6 In determining whether any borrower is in violation 7 of any loan covenant or is required to repay a loan on 8 an accelerated basis, any loan received under any govern- 9 mental program to deal with the COVID–19 virus shall 10 VerDate Sep 11 2014 23:12 Apr 23, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6549.IH H6549 lotter on DSKBCFDHB2PROD with BILLS 2 •HR 6549 IH be excluded. Any loan received from any governmental en- 1 tity under any program to deal with the COVID–19 virus 2 shall not be taken into account in determining the debts 3 or liabilities of the borrower for purposes of determining 4 whether the borrower is in conformity with any loan agree- 5 ment, or whether the lender has the right to accelerate 6 the due date of any loan agreement. 7 SEC. 3. LOAN COVENANT EFORCEMENT NOT REQUIRED. 8 From the date of enactment until the date two years 9 after the termination of the national emergency declared 10 by the President on March 13, 2020, under the National 11 Emergencies Act (50 U.S.C. 1601 et seq.) it is the policy 12 of the United States that lenders should not accelerate the 13 due date of any business loan or curtail any line of credit. 14 Federal regulatory entities shall adopt policies or regula- 15 tions so that no lender is held to be in violation of any 16 regulation due to the lender’s adherence to the policy set 17 forth in the preceding sentence. 18 SEC. 4. TRUSTEES NOT REQUIRED TO ENFORCE LOAN COV- 19 ENANTS. 20 From the date of enactment until the date two years 21 after the termination of the national emergency declared 22 by the President on March 13, 2020, under the National 23 Emergencies Act (50 U.S.C. 1601 et seq.) no trustee or 24 other person with a fiduciary duty to the holders of any 25 VerDate Sep 11 2014 23:12 Apr 23, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6549.IH H6549 lotter on DSKBCFDHB2PROD with BILLS 3 •HR 6549 IH debt security shall be liable for any decision made not to 1 enforce a loan covenant. 2 SEC. 5. DEFINITIONS. 3 (a) GOVERNMENTAL PROGRAM TO DEAL WITH THE 4 COVID-19 VIRUS.—The term ‘‘governmental program to 5 deal with the COVID-19 virus’’ means any program cre- 6 ated by the Coronavirus Preparedness and Response Sup- 7 plemental Appropriations Act, 2020 (Public Law 116– 8 123), the Families First Coronavirus Response Act (Pub- 9 lic Law 116–127), or the Coronavirus Aid, Relief, and 10 Economic Security Act (Public Law 116–136) and any 11 program established by the Federal Government or any 12 State, local, tribal, or territorial government for the pur- 13 pose of reducing the economic dislocation caused by the 14 spread of COVID-19. 15 (b) LOAN COVENANT.—The term ‘‘loan covenant’’ 16 means any provision which allows or requires the accelera- 17 tion of repayments due under any loan agreement, or 18 which reduces the availability of funds under a line of 19 credit, due to any act or omission of the borrower or any 20 entity related to the borrower. ‘‘Loan covenant’’ includes 21 any provision which accelerates repayment under a loan, 22 or reduces the amount that may be borrowed under a line 23 of credit, because the borrower’s total liabilities or current 24 VerDate Sep 11 2014 23:12 Apr 23, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6549.IH H6549 lotter on DSKBCFDHB2PROD with BILLS 4 •HR 6549 IH liabilities exceed any benchmark, or any percentage of the 1 borrower’s assets, revenues, equity, or other benchmark. 2 Æ VerDate Sep 11 2014 23:12 Apr 23, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H6549.IH H6549 lotter on DSKBCFDHB2PROD with BILLS