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
What Small Businesses Need to Know About the Paycheck Protection Program (PPP)
Much has already been written about the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the $2.2T emergency aid package signed into law on March 27. What seems to be getting the lion’s share of headlines are the recovery rebates that will soon be sent to qualified individual taxpayers. But for small businesses and independent contractors, among others, now struggling by virtue of the pandemic, the Paycheck Protection Program (PPP) is another of the CARES Act offerings that should be top of mind.
Here, Michelman & Robinson answers some of the questions you may have about the PPP.
Q. Big picture, what is the PPP?
A. It is not surprising that unemployment rates have spiked as a result of the COVID-19 crisis. Given the government-mandated closures of countless non-essential businesses, as well as the overall economic hit businesses, large and small, are taking because of the outbreak, more and more employers are laying off, or otherwise furloughing, employees at an alarming rate.
The federal government—in an attempt to help small businesses and other covered entities stay afloat, and to incentivize them to keep employees on their payrolls despite coronavirus-related declines in business—has created the PPP. By way of this program, which has been designed to cover an employer’s payroll expenses for up to eight weeks, loan guarantees are being offered through the Small Business Administration (SBA) and its partner banks. It gets even better. If a borrower, among other things, retains its employees at a headcount and salary levels comparable to those prior to the pandemic, these PPP loans are forgivable. Also, pursuant to the PPP, all SBA fees are waived (as are collateral and personal guarantee requirements) and loan payments, if not forgiven, can be deferred for up to a year.
Q. What types of entities can qualify for a PPP loan?
A. First and foremost, small businesses—those with less than 500 employees—that have realized losses or otherwise been negatively impacted because of the coronavirus.
Certain non-profits, veterans’ organizations, small tribal businesses, sole proprietorships, independent contractors, and self-employed individuals are eligible for PPP loans as well. For some businesses having several different franchises and an aggregate of employees reaching well beyond 500 (read: restaurants and hotels), PPP loans can be obtained by particular locations having less than 500 workers.
Q. When will PPP loans be available?
A. Qualifying borrowers can apply now, except for independent contractors and those that are self-employed, who cannot submit applications until April 10. The window to apply for a PPP loan closes for everyone on June 30.
Q. How involved is the PPP application process?
A. Not very. The PPP application is a rather straightforward form found here. Of course, applicants must also provide supporting documentation, such as their last 12 months of payroll reports from the IRS (which include information on gross wages, state and local taxes, vacation pay, and so forth).
Borrowers can apply for PPP loans at any participating SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, or Farm Credit System institution.
Q. How much can a small business or other eligible entity borrow?
A. The short answer is up to 250% of their average monthly payroll in 2019, with loans capped at $10M each. And if at least 75% of the borrowed funds are spent on payroll, the borrower will be eligible for loan forgiveness.
Q. How are monthly payroll expenses calculated for purposes of PPP loans?
A. Would-be borrowers can include the following when calculating their monthly payroll expenses: salaries, wages, commissions, cash tips, and the like; costs associated with paid vacations and family, medical, and sick leave; sums associated with employee dismissal or separation; payments for group health-care benefits, including insurance premiums; payment toward employee retirement benefits; and payment of state and local taxes on employee compensation.
Q. Are there any specific costs that cannot be considered by borrowers when calculating average monthly expenses?
A. Yes, the following expenses are not to be factored into the average monthly expense calculation: compensation above $100,000 per employee; federal payroll taxes and income taxes withheld on wages; compensation paid to employees whose principal residence is outside the U.S.; payments for sick and family leave covered under the Family First Coronavirus Response Act; and loan payments associated with another SBA loan program (where the borrower uses those loan proceeds for payroll expenses).
Q. What can PPP loan proceeds be used for?
A. Borrowers are allowed to earmark PPP loan proceeds for salaries, commissions, and the like; 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.
Businesses that have committed to an Economic Injury Disaster Loan (EIDL) between February 15 and June 30, 2020 are allowed to refinance those EIDLs into PPP loans, and any outstanding loan payments can be added to their payroll expenses.
Q. Under what circumstances will the SBA forgive a PPP loan?
A. To qualify for loan forgiveness, borrowers must use at least 75% of the loan proceeds to cover payroll costs (as set forth above); 25% of the loan amount can go to mortgage interest, rent, and utilities.
Note that borrowers can offset no more than eight weeks of eligible payroll expenses, and for their loans to be forgiven, borrowers must retain employees at their pre-pandemic salaries (or a comparable level). In terms of the latter requirement, borrowers have until June 30, 2020 to restore their full-time employment and salary levels for any staffing changes made between February 15 and April 26.
To be approved for loan forgiveness, borrowers must submit an application and supporting documentation to their lenders verifying certain items such as the number of employees on payroll; compensation levels; mortgage interest, rent, and utility payments; etc.
Q. What if a borrower does not abide by the requirements for loan forgiveness?
A. Any portion of loan proceeds not forgiven because they went toward expenses not contemplated above will convert to a loan repayable to the SBA within two years at a top interest rate of 1%. In such a circumstance, borrowers will not incur loan fees or prepayment penalties.
Q. Anything else that borrowers should know about PPP loans?
A. Yes, businesses that obtain PPP loans are not eligible for the Employee Retention Credit or the deferment of payment of employer payroll taxes authorized by the CARES Act.
Most importantly, only $349B has been set aside for PPP loans. Given the overwhelming demand and likelihood that the program will be oversubscribed, and because proceeds are being made available on a first-come, first-served basis, those interested should apply as soon as they can.
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.