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The CARES Act: Implications for Tribes

Congress's third legislative response to the COVID-19
outbreak-the Coronavirus Aid, Relief, and Economic
Security (CARES) Act-became P.L. 116-136 on March
27, 2020. Much of the CARES Act's aid and relief is
available to, or will otherwise affect, federally recognized
Indian tribes or tribal business entities. This In Focus
discusses the provisions that most directly implicate tribes
and tribal interests, though the agencies responsible for
enacting these provisions will likely issue additional
guidance and interpretation in the days ahead.

Direct Assistance to Small Businesses. S ection 1102 of the
CARES Act sets up a Paycheck Protection Program within
the Small Business Administration's (SBA's) existing 7(a)
loan program. This authorizes $349 billion in loans to all
eligible small businesses, 501(c)(3) nonprofit organizations,
veterans organizations, sole proprietors, and independent
contractors, including Tribal business concerns.
Generally, tribal business concerns with 500 or fewer
employees may be eligible for these loans, which do not
require collateral, are available until June 30, 2020 (or until
funding runs out), and can be for up to 2.5 times an
applicant's average monthly payroll costs from the previous
year, capped at $10 million. In addition to the usual uses for
small business loans, recipients can use these funds to cover
payroll costs (including benefits) and most mortgage
interest, rent, and utility costs. Section 1106 authorizes
forgiveness for loan amounts used for such costs during the
eight weeks after loan origination, meaning those amounts
would not need to be repaid. Section 1110 includes tribal
business concerns as eligible entities for Economic Injury
Disaster Loans to be used for similar purposes, including
sick leave for COVID-19-affected employees. The SBA
may provide an advance payment of up to $10,000 that
does not have to be repaid.

Although the CARES Act itself does not exclude particular
types of businesses from eligibility for these loans, it does
not provide explicit relief from existing SBA regulations
that prohibit funding certain categories of businesses. For
example, 13 C.F.R.  120.110 prohibits SBA loans to
businesses that receive more than one-third of their gross
income from legal gaming or that engage in any illegal
activity. Thus, without additional legislation or rulemaking,
tribally owned casinos and marijuana operations may be
unable to access SBA-administered loans and grants.

Direct Assistance for Tribal Governments. Section 5001 of
the CARES Act creates a Coronavirus Relief Fund (CRF)
of $150 billion for FY2020 and sets aside $8 billion of that
amount for tribal governments. The entire $8 billion must
be distributed, and distribution is based on the tribes'

FY2019 expenditures. The Bureau of Indian Affairs (BIA)
has solicited tribal leaders' input on distribution
methodology and guidance on what constitutes necessary
expenditures. Tribes must certify that they will only use
CR funds to pay extrabudgetary necessary expenditures
arising due to the COVID- 19 outbreak between March 1
and December 30, 2020.

Additional Assistance for Tribes and Businesses. Section
4003 in Title IV of the CARES Act, the Coronavirus
Economic Stabilization Act of 2020 (CESA), authorizes the
Secretary of the Treasury to make loans, loan guarantees,
and other investments and subsidies to provide liquidity for
losses that states, municipalities, and eligible businesses
incur as a result of the COVID-19 pandemic. Under Section
4002, eligible U.S. businesses are those that have not
otherwise received adequate economic relief in the form of
loans or loan guarantees from the CARES Act; the term
State includes any Indian Tribe. Thus, both tribal
governments and tribal business entities ineligible for other
relief may be eligible for assistance under this program. The
Secretary will determine the forms, terms, and conditions
(including a minimum interest rate) of the loans and loan
guarantees. CESA's appropriations total $500 billion.

BIA Funding. The CARES Act allocates $453 million in
addition to existing funding for BIA's Operation of Indian
Programs, of which at least $400 million shall be made
available to meet the direct needs of tribes. These funds
are available until September 30, 2021, for COVID-19-
related responses, including (1) public safety and justice
programs; (2) deep cleaning of facilities; (3) purchase of
personal protective equipment; (4) improved teleworking
capability; (5) welfare assistance and social services
programs (including assistance to individuals); and
(6) assistance to tribal governments.

Indian Health Services (IHS) Funding. The CARES Act
designates $1.032 billion in additional IHS funding for the
COVID-19 response, available until September 30, 2021.
Of that amount, up to $65 million is available for electronic
health record stabilization and support, including tribal
consultation. Nearly half of the allocation-at least $450
million-must be distributed (1) through IHS's directly
operated programs, (2) to tribes and tribal organizations
under the Indian Self-Determination and Education
Assistance Act (ISDEAA), and (3) through contracts or
grants with urban Indian organizations via the Indian Health
Care Improvement Act. Funds transferred under the
ISDEAA throughout the CARES Act are explicitly one-
time transfers with no appropriated contract support costs.

April 9, 2020

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