April 16th – Attorney Christian Miller: COVID-19 Update

April 16, 2020

I hope everyone has been weathering the storm well.  It often seems that things related to small businesses and COVID-19 stimulus change at light speed.  In addition to my periodic updates,  our MPL Law Firm Resource Page is frequently updated (usually daily).  I encourage all of you to check back at this information and its resources for any updates that might be especially applicable or helpful to your situation.

Governor Wolf issued an order yesterday for businesses to implement specific safety precautions.  The full order is linked.  Currently, this only applies to life-sustaining/essential businesses (or those operating under a waiver) that are permitted to continue in-person operations.  The order involves a detailed list including cleaning specifications, distancing, work breaks, mask usage, and protocols in the event an individual at your business (employee, customer, or guest) is suspected of having COVID-19 (including reporting, closing down for 24 hours, cleaning, and reopening).  Although these naturally only apply to businesses permitted to continue operations right now, it is worthwhile for all businesses to look into the requirements.  I have a feeling that, as the economy reopens in PA (and beyond), employers will be charged with implementing these same procedures to operate as a condition to reopening in general.

The PPP Loan program seems to be an ever-evolving animal in itself.  We have seen a variety of loan documents from different lenders, and thus far no two seem to be the same.  The good news is that businesses are getting approved and funded.  But the changes to the program are still coming, as recently as April 14th, when the SBA issued updated guidelines.   Of particular note is that partners in a partnership (which includes members of an LLC taxed as a partnership) should treat their compensation (guaranteed payments or distributions) as part of the “payroll costs” (subject to the $100,000 limit) on the partnership’s PPP loan application.  This is a reversal from guidance which said each partner should individually file a PPP application.   Affected applicants are encouraged to immediately reach out to their lender if they did not calculate partner/owner compensation in “pay roll costs” as provided in the linked document.  For reference, linked are the updated guidance, with the partnership issue discussed on pages 4 and 5.

Working capital, beyond stimulus funds, is a great concern for many businesses once they get to the other side of this shut-down and pandemic.  David Barnitt, with Attract Capital, a middle market broker which our office works closely with, recently provided a short talk on replenishing funds and restarting business using different resources and lending facilities.  It is a relatively short clip (about 16 minutes) and worth a watch to pick up some valuable insight.  You can watch it here:

Again, I encourage all of you to periodically review our MPL Law Firm Resource Page.  And for tax information related to COVID-19 issues, feel free to review information here from Eisenhart & Co..   Thank you, and stay safe.


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