october 28, 2020
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October 19, 2020
october 15, 2020
october 12, 2020
october 8, 2020
october 5, 2020
september 22, 2020
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September 11, 2020
august 4, 2020
july 6, 2020
july 1, 2020
- PPP Loan Deadline May Be Extended as SBA Issues New Rules Relating to Loan Forgiveness and Eligibility
- California Looks to Pass Legislation Concerning Business Interruption Coverage Due to COVID-19
June 29, 2020
June 22, 2020
- PPP Loan Forgiveness Application Forms Updated and Streamlined
- Nevada Division of Insurance to Disallow Policy Exclusions Related to COVID-19
- CDI Announces New Order Regarding Workers’ Compensation Premium Savings for CA Businesses Affected by COVID-19
june 15, 2020
june 10, 2020
- Note to the SBA: Debtors in Bankruptcy Are Eligible for PPP Loans
- California Modifies the Tolling of Statutes of Limitations in Civil Cases
june 8, 2020
June 4, 2020
may 29, 2020
may 28, 2020
may 27, 2020
- Hoteliers Beware: a Return to Business Post-Pandemic Brings With It Potential Legal Liability
- House Contemplates Revisions to the Paycheck Protection Program
may 15, 2020
may 14, 2020
- U.S. House Democrats Introduce HEROES Act, a New $3T Stimulus Package
- SAFE Banking Act for Cannabis-Related Businesses Included in the HEROES Act
may 12, 2020
may 8, 2020
- Treasury and the SBA Issue Guidance Regarding the Employee Retention Credit
- Businesses Reopen in Los Angeles County as Stage 2 of California’s Statewide Plan Begins
- Update: Large Employers Required to Pay Coronavirus-Related Sick Leave Under New L.A. County Ordinance
may 6, 2020
- SBA Extends PPP Certification Safe Harbor to May 14
- EPLI Insurance and Employee Benefits in the Age of the Coronavirus
may 5, 2020
- Update: PPP Guidance Issued by the SBA and U.S. Treasury at Odds With the CARES Act—Michelman & Robinson Files First-of-Its-Kind Lawsuit Challenging FAQs
- NAIC Issues Business Interruption Data Call in the Wake of COVID-19
may 4, 2020
may 1, 2020
april 29, 2020
- Planning for Your Employees' Return to the Workplace
- Los Angeles Hospitality Workers Among Those Thrown a Potential Lifeline
april 24, 2020
- Attention Cannabis Businesses: Hope May Be on the Horizon for Federal COVID-19-Related Relief
- California Department of Insurance Issues Notice Granting Tax-Filing Extension in Response to COVID-19
- SEC Approves Amendments to Nasdaq and NYSE Continued Listing Requirements Due to the COVID-19 Pandemic
April 23, 2020
april 21, 2020
- Additional Funding Is on the Way to Resurrect the PPP
- Certifying Your PPP Loan: Proceed With Caution
april 17, 2020
april 16, 2020
- Employment in the Wake of Coronavirus: EEOC and OSHA Guidance Allows Employers to Go Where They Could Not Go Before
- New Yorkers Ordered to Stay at Home Even Longer Amid the COVID-19 Crisis
- Paycheck Protection Program Funds Exhausted
april 15, 2020
April 14, 2020
- Insurance Companies Have Been Ordered to Provide COVID-19-Related Premium Relief to Businesses and Drivers in California
- What to Do If Your New York Business Has Been Deemed Non-Essential
APRIL 13, 2020
- IP Deadlines and Fees Extended Under the CARES Act
- Employment in the Wake of Coronavirus: Reintegrating Your Workforce in the New Normal
APRIL 10, 2020
- You Successfully Applied for and Received a PPP Loan Under the CARES Act: Now What?
- Safer at Home Order in L.A. Extended to May 15
- Maintaining Your Trade Secrets During the Coronavirus Crisis
APRIL 9, 2020
april 8, 2020
- Congress Looks to Bolster the PPP With Another $250B in Funding
- U.S. Treasury Provides Further Guidance to PPP Borrowers and Lenders
- L.A. Mayor Amends COVID-19-Related Paid Sick Leave Ordinance
april 7, 2020
April 3, 2020
april 2, 2020
april 1, 2020
March 31, 2020
march 30, 2020
- Large Employers Required to Pay Coronavirus-Related Sick Leave Under New L.A. Ordinance
- Insurance Coverage Potentially Triggered by COVID-19
- Attention Insurers: CDI Orders Mandatory Call for Business Interruption Coverage Information in the Wake of COVID-19
- DOL Is Requiring Employers to Post Families First Employee Rights Notice
March 27, 2020
- A Comprehensive Guide to Understanding Coronavirus-Related State Assistance Programs: Who is Giving What to Whom (Part II)
- HHS Relaxing Enforcement of HIPAA to Facilitate Sharing of Information During the COVID-19 Crisis
March 26, 2020
march 25, 2020
march 24, 2020
- Navigating the Coronavirus Pandemic: a Critical Business Review Checklist
- SBA Loans for Companies Impacted by Coronavirus
- SEC Relaxes Federal Proxy Rules for Annual Meetings
march 23, 2020
- Federal Reserve Responds Boldly to Coronavirus-Related Economic Downturn
- The Number of Jurisdictions Implementing Stay-at-Home Orders Is Increasing Exponentially
- Michelman & Robinson’s Guide to Coronavirus-Related Paid Sick Leave and Unemployment Insurance Laws in the Tri-State Area
MARCH 21, 2020
MARCH 20, 2020
- New York Governor’s PAUSE Order
- Illinois Governor’s Statewide Stay-at-Home Order
- Force Majeure Clauses in Commercial Real Estate Contracts
MARCH 19, 2020
- SEC Provides Regulatory Relief for Public Reporting Companies
- Student Loan Borrowers Can Breathe a Sigh of Relief, At Least Temporarily
- California Governor's Statewide Stay-At-Home Order
MARCH 18, 2020
- "Shelter in Place" Orders
- Telecommuting in the Age of Coronavirus
- Families First Coronavirus Response Act Just Passed by the Senate and Signed Into Law by the President
MARCH 17, 2020
MARCH 16, 2020
MARCH 5, 2020
Certifying Your PPP Loan: Proceed With Caution
SANFORD MICHELMAN, BRYAN JOHNSON, ROBERT BERG
APRIL 21, 2020
Demand for loans under the Payroll Protection Program has been through the roof because of the number of businesses suffering through the economic consequences of COVID-19. As Michelman & Robinson has previously reported, the original $349B in funding for the PPP has been exhausted, and the Senate today passed a bill earmarking another $310B for these loans administered by the Small Business Administration.
Those who have applied—or will be applying—for a PPP loan will no doubt be aware of the section in the SBA’s Borrower Application Form that requires a company’s authorized representative to certify in good faith that “[c]urrent economic uncertainty makes [the] loan request necessary to support the ongoing operations of the Applicant.”
While it may seem simple enough to check that box, borrowers must clearly understand that significant penalties and even criminal punishment may attach to loan submissions that do not meet this standard of necessity. That being said, there is a problem: the SBA or U.S. Treasury has yet to issue any guidance that explains the precise circumstances that might make a PPP loan necessary for any given business.
In the absence of such direction, M&R answers some of the questions borrowers will inevitably have about how they can best proceed with caution.
Q. In order to apply for a PPP loan, do I need to fill out a Borrower Application Form that includes certification requirements?
A. Yes, you do. Among other things, you must certify all of the following:
- You were in operation on February 15, 2020 and had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on Form(s) 1099-MISC
- Current economic uncertainty makes the loan request necessary to support your ongoing operations
- The PPP funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the PPP rules
- You understand that if the PPP funds are knowingly used for unauthorized purposes, the federal government may hold you legally liable, such as for charges of fraud
- You will provide your lender with documentation verifying the number of full-time equivalent employees on your payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following the loan
- You understand that loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities, and not more than 25% of the forgiven amount may be for non-payroll costs
- During the period beginning on February 15, 2020 and ending on December 31, 2020, you have not and will not receive another loan under the PPP
- That the information provided in your loan application and the information provided in all supporting documents and forms is true and accurate in all material respects, and that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law
Q. What might I (or my company) be subject to if I make the foregoing certifications?
A. This is the critical question. Unfortunately (and as stated above), there is a lack of guidance from the SBA or U.S. Treasury regarding the type of coronavirus-related impact to a business’s operations that would render a PPP loan necessary to support a borrower’s ongoing operations. Thus, borrowers must tread lightly when seeking out PPP loans given the potential liability (read: jail time and sizeable fines) for making a false certification, even unknowingly.
Consider this: what if prior to the pandemic being declared, you pulled money out of your credit line, and then, in March, revenues were healthy and you therefore had plenty of cash on hand. Could you nevertheless certify, in good faith, that current economic uncertainty makes a PPP loan request necessary to support ongoing operations just because you forecast a hiccup in accounts receivable for the months of April or May? And what if you do not end up using the loan proceeds as planned? This is where the vague nature of the PPP certification becomes problematic, especially in light of the announcement by the Department of Justice that it will be monitoring the program closely given anticipated widespread fraud.
Q. How can I best protect myself from the perils of PPP certification?
A. The short answer is properly documenting the PPP loan process for purposes of potential liability and risk mitigation. Even though not expressly required by the Borrower Application Form, you would be wise to properly create a record that supports the proposition that the COVID-19 pandemic and resulting economic volatility or hardships to your business justify your loan request. Such documentation could include an analysis of lost revenues, projected future losses, and payroll and other operating expenses (present and future), with an emphasis on how each of these metrics has been adversely impacted by the coronavirus outbreak. Likewise, you could confirm in writing your adherence to corporate procedures and protocols in preparing the loan package, that the submitted financials have been properly reviewed, and, if applicable, that the decision to apply for a PPP loan was made through a vote of your board of directors. Whatever the case may be, if done right, this work can go a long way in providing a measure of protection for you or any company officer that has signed off on the PPP certifications.
Q. If I am ever faced with an allegation that my PPP loan was unnecessary, what can I do to limit any possible exposure?
A. See the above. If crafted properly, your written record can be leveraged to establish why, in your estimation, the PPP loan was necessary under the circumstances. In fact, such a writing could evidence your good faith; serve as the basis of argument to the SBA; and be used as a mechanism to trigger coverage under an insurance policy (e.g., directors and officers liability insurance and the like) or corporate indemnity pursuant to your company’s governance provisions.
Bottom line: if you get it wrong, the certification process could be quite dangerous. But rest assured, there are ways to mitigate any civil or criminal accountability and lean on your insurance portfolio for protection. With respect to all of the above, M&R is here to help.
We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.