Title: Business Borrowers Protection Act
Policy area: Finance and Financial Sector

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.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6790 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 6790

To prohibit the enforcement of certain loan covenants during the COVID-
             19 national emergency, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 8, 2020

Mr. Sherman (for himself and Ms. Waters) introduced the following bill; 
       which was referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To prohibit the enforcement of certain loan covenants during the COVID-
             19 national emergency, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Business Borrowers Protection Act''.

SEC. 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 et 
        seq.) relating to the COVID-19 pandemic.
            (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'' means a loan 
        entered into on or before the date of the enactment of this 
        Act.
            (2) COVID-19 relief program.--The term ``COVID-19 relief 
        program'' means any program created by--
                    (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); or
                    (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'' means any 
        provision in a covered loan agreement that allows or requires 
        the acceleration of repayments due under any loan agreement or 
        that reduces the availability of funds under a line of credit--
                    (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.
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