Business Borrowers Protection Act

To prohibit the enforcement of certain loan covenants during the COVID–19 national emergency, and for other purposes. 1. Short title This Act may be cited as the Business Borrowers Protection Act 2. Enforcement of loan covenants (a) Loans received under COVID–19 relief programs Any loan that a borrower receives under a COVID–19 relief program may not be taken into account— (1) in determining whether— (A) the borrower is in violation of any loan covenant of a covered loan; or (B) a lender may accelerate the due date of any covered loan agreement; or (2) in calculating the debts or liabilities of the borrower for purposes of determining whether such borrower is in conformity with any covered loan agreement. (b) Loan covenants not enforceable during COVID–19 national emergency (1) In general A lender may not enforce any loan covenant during the period beginning on the date of enactment of this Act and ending on the day that is 1 year after the termination of the national emergency declared by the President on March 13, 2020, under the National Emergencies Act ( 50 U.S.C. 1601 (2) Rulemaking Not later than the end of the 60-day period beginning on the date of enactment of this Act, the Secretary of the Treasury shall issue such regulations and guidance as may be necessary to ensure that any lender who complies with the requirements described in paragraph (1) is not deemed to be in violation of any law or regulation relating to the enforcement of loan covenants. (c) Trustee or person with fiduciary duty not liable (1) In general No trustee or other person with a fiduciary duty to the holders of any debt security shall be liable for any decision made not to enforce a loan covenant related to such debt security. (2) Applicability Paragraph (1) shall only apply during the period beginning on March 12, 2020, and ending on March 13, 2022. (d) Definitions In this Act, the following definitions apply: (1) Covered loan The term covered loan (2) COVID–19 relief program The term COVID–19 relief program (A) the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 ( Public Law 116–123 (B) the Families First Coronavirus Response Act ( Public Law 116–127 (C) the CARES Act ( Public Law 116–136 (D) the Federal Government or any State, local, Tribal, or territorial government for the purpose of reducing the financial losses of businesses caused by the spread of COVID–19. (3) Loan covenant The term loan covenant (A) due to any act or omission of a borrower or any entity related to the borrower; or (B) because the total liabilities or current liabilities of a borrower exceed— (i) any benchmark; or (ii) any percentage of the assets of the borrower, revenues, equity, or any other benchmark.

Summary: Business Borrowers Protection Act This bill prohibits a creditor from enforcing a loan covenant that requires the accelerated repayment of a loan if the borrower receives a loan under certain COVID-19 (i.e., coronavirus disease 2019) economic aid programs. Additionally, a creditor is prohibited from enforcing any loan covenant beginning on the date of enactment of this bill and ending one year after the termination of the COVID-19 national emergency.