october 28, 2020
october 22, 2020
October 19, 2020
- Hope for Companies Where COVID-19-Related Business Interruption Claims Have Been Denied Without Investigation
october 15, 2020
october 12, 2020
october 8, 2020
october 5, 2020
september 22, 2020
- California Employers Now Subject to Additional COVID-19-Related Laws Related to Cal/OSHA Reporting and Worker’s Compensation
september 21, 2020
September 11, 2020
- COVID-19-Related Paid Sick Leave Has Been Expanded in California Yet Again to All Employers with 500+ Employees
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
- House Introduces Pandemic Risk Insurance Act of 2020 in the Wake of COVID-19 Business Interruption Claims
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
- 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
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
- Attention Insurers: the CDI Has Ordered You to Fairly Investigate All Business Interruption Insurance Claims Caused By the COVID-19 Outbreak
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
- Clarifying the Paycheck Protection Program: Payment of Insurance Premiums and Loan Forgiveness under the CARES Act
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
- M&R Coronavirus Risk Mitigation Team: A Multi-Disciplinary Legal Team Ready To Immediately Address A Host Of Coronavirus-Related Issues for Businesses, Quickly And Holistically
MARCH 16, 2020
MARCH 5, 2020
Clarifying the Paycheck Protection Program: Payment of Insurance Premiums and Loan Forgiveness under the CARES Act
Applications are now being taken from borrowers (except for independent contractors and self-employed individuals, who must wait until April 10) looking to secure loans through the new Small Business Administration (SBA) Paycheck Protection Program (PPP) authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. For many small businesses, the process thus far has been both frustrating—as banks and other lending institutions iron out some early kinks—and confusing. Particular questions remain as to whether PPP loan proceeds can be used for the payment of insurance premiums, and still qualify under the program’s loan forgiveness rules.
Here, Michelman & Robinson provides some clarity, but first, a recap of some PPP basics.
Q: Where can the details of the PPP be found in the CARES Act?
A: The PPP is found in Section 1102 et seq. of the CARES Act, which serves to amend Section 7(a) of the Small Business Act (15 U.S.C. § 636(a)).
Q: Who qualifies for a PPP loan?
A: For an in-depth review of the PPP and eligibility requirements for loans under the program, you can view our comprehensive alert, here.
Q: What can PPP loan proceeds be used for?
A: As set forth in our previous alert, borrowers may use PPP loan proceeds for salaries, wages, and commissions; group health-care benefits and insurance premiums; mortgage interest payments (though prepayment fees or payment of principal is not allowed); rent; utilities; and certain interest on other debt obligations.
Q: Are there any specific requirements that borrowers must abide by under the PPP?
A: Yes, eligible recipients applying for a loan under the PPP must make a good faith certification:
• that the uncertainty of current economic conditions make necessary the loan request to support ongoing operations
• that funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments
• that the eligible recipient does not have an application pending for another SBA loan for the same purpose, or that duplicative amounts have already been applied for or received
• that during the period beginning February 15 and ending December 31, 2020, the eligible recipient has not received SBA loan proceeds for the same purpose, or that duplicative of amounts have not already been applied for or received
Q. The certification requirement makes no mention of insurance; does that mean any portion of my PPP loan cannot be used to pay for my premiums?
A. No, the CARES Act specifically includes, among the allowable uses of PPP loans, “costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums . . .” As such, though the certification required of borrowers fails to mention insurance costs, payment of premiums does seem to be part and parcel of the PPP.
That being said, it would be helpful if the SBA or U.S. Treasury Department issued some guidance or regulations to that effect. Toward that end, a request for such clarification has been made to the SBA, and we will continue to monitor developments.
Q: What are the loan forgiveness requirements under the PPP?
A: A borrower is eligible for forgiveness of its PPP loan when proceeds are used to pay the following costs during the eight-week period beginning on the loan origination date:
• payroll costs
• any payment of interest on any covered mortgage obligation (except for prepayment of or payment of principal)
Again, the foregoing, which is taken from the applicable statutory language, does not make reference to insurance costs, which begs another question: will a borrower meet the PPP’s loan forgiveness standards if it uses loan proceeds to pay for premiums?
As stated, we believe that the intent of the Act is to allow loan proceeds under the PPP to be used to pay insurance premiums, and that such payments would be included within the program’s loan forgiveness standards. Hopefully, official clarification will be forthcoming.
Q: What are the basics of the loan forgiveness standards under the CARES Act?
A: Of course, the amount of loan forgiveness cannot be more than the principal amount of the PPP loan. What is lesser known is that the amount of loan forgiveness will be reduced based on any reduction by the borrower of employee headcount or wages paid to employees earning less than $100,000 annually.
To have a PPP loan forgiven, a borrower must submit an application to its lender that includes:
• documentation verifying the number of full-time employees on payroll and their pay rates for certain prescribed periods (e.g., payroll tax filings reported to the IRS, as well as state income, payroll, and unemployment insurance filings)
• documentation verifying mortgage, lease, and utility payments (e.g., cancelled checks, payment receipts, etc.)
• a certification that (1) the documentation presented is true and correct, and (2) the amount for which forgiveness is requested was used to retain employees, and make mortgage, rent, and utility payments
• any other documentation the SBA determines to be necessary
Borrowers should be aware that loans will not be forgiven without this documentation. Also, as the certification requirement (again, culled directly from the statute) does not include reference to insurance costs, we await further guidance or, better yet, confirmation that PPP loan proceeds can be used for—and subsequent loan forgiveness will apply to—payment of premiums.
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.