Friction with China expands into U.S. COVID-19 relief

BY David A. Kaufman

The new Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which is part of the massive end-of-year COVID-19 economic relief effort, includes almost $300 billion in support for small (less than 300 employees) businesses. However, organizations with certain ties to China are not eligible for these second Paycheck Protection Program (PPP) funds.

The legislation specifically excludes from this new program businesses “for which an entity created in or organized under the laws of the People’s Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in the People’s Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or indirectly, not less than 20 percent of the economic interest of the business concern or entity.” It also denies access to possibly forgivable loans to an organization (including non-profits) that “retains, as a member of the board of directors of the business concern, a person who is a resident of the People’s Republic of China.” 

China and Hong Kong were uniquely singled-out by the new legislation, and are the only geographies targeted by these prohibitions under the program. This comes at a time where tensions between the U.S. and China over trade, human rights, and national security have been ratcheting up.  

The U.S. Small Business Administration will likely be issuing additional regulations clarifying these restrictions. Nixon Peabody will be monitoring these developments. In the meantime, if you have questions regarding how this might impact your business, please contact us.

This blog post is available in Chinese

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David A. Kaufman

Director of Global Strategies

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