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
september 21, 2020
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
PPP Loan Certification: the Need for Caution Continues!
SANFORD MICHELMAN, BRYAN JOHNSON
APRIL 23, 2020
As expected, the House of Representatives has passed the $480B coronavirus relief package that will serve to provide financial help to small businesses and hospitals feeling the sting of the coronavirus pandemic and expand COVID-19 testing. Most significantly, the legislation, which will now go to the President for signature, injects another $310B into the Paycheck Protection Program.
Regarding the PPP, there has been growing backlash directed at larger, well-capitalized companies that have received these loans through the Small Business Administration—this despite the requirement that every business certify in its Borrower Application Form that “current economic uncertainty makes [the] loan request necessary to support the ongoing operations of the Applicant.”
In a prior alert, Michelman & Robinson emphasized how important it is for borrowers to proceed with caution given the PPP’s certification mandates. This is particularly true in light of U.S. Treasury Secretary Steve Mnuchin’s recent comment that, “there [will be] severe consequences” for PPP borrowers that have improperly certified their need for relief under the CARES Act.
As such, beyond the size requirements applicable to entities seeking PPP loans, it is important that borrowers—and would-be borrowers—seriously consider whether their loan requests are necessary in the first place given their particular circumstances. With that in mind, the U.S. Treasury Department issued the following guidance today:
Q. Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan
A. In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to the SBA, upon request, the basis for its certification. Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.
The Takeaway From Treasury’s Statement
When our prior alert regarding PPP certification was distributed, neither the SBA nor Treasury had issued guidance explaining the circumstances that might make a PPP loan necessary for any given business. Now that the Treasury has spoken on the topic—at least in terms of companies with adequate sources of liquidity—M&R can offer the following observations:
- First and foremost, Treasury’s guidance should not serve to dissuade companies that need PPP relief from applying for it. As otherwise stated, the fear of “severe consequences” as referenced by Secretary Mnuchin should not be a deterrent for businesses rocked by the COVID-19 crisis, though companies adversely impacted by the coronavirus outbreak should adhere to our previously-made suggestions (e.g., when applying for loans, each borrower should create a comprehensive record supporting the proposition that COVID-19 and the resulting economic volatility or hardships to its business justify the loan request).
- That being said, every borrower must carefully assess its economic need for a PPP loan and be able to certify in good faith that current economic uncertainty makes a loan request necessary to support ongoing operations. In so doing, each borrower needs to consider its ability to access other sources of liquidity not significantly detrimental to its business.
- As Treasury now makes clear, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required PPP certification in good faith. To the extent such an entity seeks a PPP loan nonetheless, it should be prepared to demonstrate to the SBA the basis for its certification.
- Finally, for existing borrowers wary about the necessity of their PPP loans in the wake of Treasury’s guidance, they will be deemed by the SBA to have made the required certifications in good faith so long as their loans are repaid in full by May 7, 2020.
Bottom line: it is essential for borrowers to establish that their PPP loan requests are necessary to support ongoing operations, which is why another look at our prior alert (again, here) regarding mitigation of the issue and demonstration of good faith is highly recommended.
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.