Insights
Publications

CARES Act Money for Wineries? (Updated)

April 7, 2020 Articles

Beginning April 3rd, the Small Business Administration will begin accepting applications for Paycheck Protection Program (PPP) loans under the new CARES Act. Amid the flurry of news, small winery owners may not yet have realized the immediate advantage that might be gained from applying for such a loan. Briefly, the program allows small businesses (generally, less than 500 employees) to obtain a 2-year unsecured loan at 1.0% interest for purposes of meeting expenses associated with payroll, utilities, rent and mortgage interest. The maximum amount available is 2.5 times the business’ monthly payroll costs (determined from the average monthly payroll costs over the preceding year). In other words, the program makes available approximately two months’ worth of payroll funding at a fixed interest rate that is very low.

Wineries with existing debt will need the approval of their lenders to participate in the program, because most conventional loans for wineries include a covenant prohibiting a winery from applying for additional debt without the lender’s consent. Given the advantageous nature of the PPP loan structure, however, it seems likely that existing lenders would approve the winery’s participation in the program, since the PPP essentially provides additional cash flow at a time when it may be definitely needed.

What is unclear at this point is how complicated it will be to participate in the program. Although the application form is straightforward, it is not known how long it will take to process. Given the large numbers of applications expected to be received, and the fact that the CARES Act is a new law that has not yet been put to use, the implementation of the program is an unknown at this time. That being said, various sources examining the new law have speculated that funds could become available for participating businesses within a matter of days. Certainly, participation seems worthy of consideration.

Linked here is a more detailed summary of the program, along with a link to the application form. Because the program opens tomorrow morning for the filing of applications, we suggest that any interested wineries review the materials as soon as possible.

Firm Highlights

Publication

SEC Expands Definition of “Accredited Investor” – Here Are 5 Key Takeaways

The SEC recently adopted amendments to Rule 501(a) of Regulation D of the Securities Act of 1933 that expand the definition of “accredited investor” by adding new categories of eligibility based on professional knowledge...

Read More
News

Major Lake County Resort Development Approved

Katherine Philippakis, chair of Farella's Wine Industry Group, was quoted in the Napa Valley Registe r article, "Major Lake County Resort Development Approved." The Lake County Board of Supervisors voted to approve a massive...

Read More
Publication

Estate Planning During Uncertain Times

Farella's Wine Industry Education Series features Lauren Galbraith discussing "Estate Planning During Uncertain Times." Estate planning for vineyard and winery owners has come to the forefront during this unpredictable pandemic and in light of...

Read More
News

How Wine Business Law Is Shifting Amid Coronavirus Pandemic Allowances for Virtual Tastings, Direct Sales

Katherine Philippakis, chair of Farella's Wine Industry Group, was featured among wine law experts commenting on trends in wine business law from direct-to-consumer shipping to regulation of winery events amid COVID-19 shutdowns, the current wave...

Read More
Publication

Maximizing Business Insurance Coverage Benefits After a Fire

Unfortunately, we again write while wildfire is devouring homes and businesses in Napa and Sonoma, and threatening many more. We’ve previously posted tips about first steps that you should take in the event your...

Read More
News

Alexis Sinclair Joins Farella Braun + Martel’s Financial Services Industry Group

SAN FRANCISCO, October 14, 2020: Northern California legal powerhouse Farella Braun + Martel is pleased to announce that business transactions lawyer Alexis Sinclair has joined the firm as special counsel in its Financial Services...

Read More
Publication

20th Annual Wine Industry Conference

Farella Braun + Martel is a proud underwriter of the North Bay Business Journal's 20th Annual Wine Industry Conference, featuring an in-depth, regional view of the strategic direction of the premium wine business - by...

Read More
Publication

Top 10 Practical Business Implications Arising From the Passage of the CPRA

California’s Proposition 24 passed as expected, and the new California Privacy Rights Act will change the privacy landscape created by the California Consumer Protection Act (CCPA), which went into effect only months ago. While...

Read More
Publication

How Grape Growers Can Protect Their Interests When a Winery Approaches Insolvency

A lot goes into the making of great wine, and when a winery becomes financially unstable, there are multiple competing interests that need to be satisfied, including the banks that provide the winery with...

Read More
News

How California Wine Business Property Transfer Rules Will Change in 2021

Lauren Galbraith commented in the North Bay Business Journal article "How California Wine Business Property Transfer Rules Will Change in 2021."  “I see families in the wine business demonstrate keen awareness that they must...

Read More