Fed Exception Will Let Pass-Through Entities Get Emergency Loans (1)

The Federal Reserve has created an exception to allow S corporations and other pass-through businesses to access emergency loans.

The Thursday guidance allows those businesses to distribute funds to their owners as they would prior to the loan, “to the extent reasonably required to cover its owners’ tax obligations in respect of the entity’s earnings.”

• The emergency relief law (Public Law 116-136) that allowed the Fed to create the lending programs prohibits companies that receive federal assistance from paying dividends or making other capital distributions to shareholders.
• Owners of S corporations and other pass-through businesses, which can ...