MPL General Counsel Corner – PPP guidance is like the weather, if you don’t like it, wait five minutes.

During this time of year, if you don’t like weather, wait five minutes.  Well, I feel the same way about PPP and other relief programs.  Late Friday, the Department of Treasury released the following two Interim Final Rules (key points/updates listed below each link):

  1. IFR – Loan Forgiveness
    1. The Lender has 60 days from receipt of the loan forgiveness application to issue a decision to the SBA (change from what I heard prior to 5/22) and request payment from SBA.  (page 7)
    2. The SBA, subject to any audit, has up to 90 days to issue payment and any applicable interest less EIDL Advance Amounts (change from what I heard prior to 5/22; page 7)
    3. Upon receipt of a decision/payment from SBA, Lender then notifies Borrower of the decision and whether the balance of the loan must be paid on or before the two year maturity date (big change because it opens the door for the Lender to call the loan earlier than the maturity date; page 8)
    4. The SBA & the Department of Treasury clarified and provided more flexibility for employers that have different payroll periods (e.g., weekly, monthly, bi-weekly).   Essentially, the borrower’s eight-week period begins on the first day of the first payroll cycle in the covered period (see example on page 10).
    5. Hazard pay and bonuses are allowed to be paid to employees as long as the annual salary of does not exceed $100,000 (as prorated for the covered period; $15,385 for 8 weeks; page 11)
    6. Non-payroll costs incurred but paid on the next billing cycle which is outside the covered 8-week period are eligible for forgiveness (see example on page 12).
    7. Advance payments of eligible mortgage interest are not eligible for forgiveness.
    8. Clarifications on the definition of Full Time Equivalent, the impact of Salary Reduction, attempts to rehire laid off employees who do not want to return, and employees who are fired for cause, voluntarily resign or request a schedule reduction (pages 13-22)
  2. IFR – SBA Loan Review Procedures and Related Borrower and Lender Responsibilities
    1. The SBA may review any PPP loan of any size at their discretion.  (page 7)
    2. The borrower must retain documentation for the PPP loan for 6 years after the loan is forgiven or paid back in full.  (page 8)
    3. If the SBA determines a borrower was ineligible to receive a PPP loan or receive PPP forgiveness, there will be an appeals process.  The appeals process will be outlined in a subsequent IFR.  (page 10)
    4. If the Lender determines that the Borrower is not entitled to forgiveness in any amount, they must notify in writing the SBA and the Borrower with its reason.  The Borrower has 30 days from the denial to request a review of the forgiveness application.  (page 13)
    5. If the SBA determines a Borrower is ineligible for a PPP loan and the lender had already approved it, the Lender’s processing fees are subject to a claw-back.  The timeframe for the SBA to make this determination is 1 year from the date of the PPP loan disbursement.  (page 15)
    6. If an SBA lender does not satisfy its obligations under the PPP regulations, then its lender processing fees are subject to a claw-back and the accompanying loans may lose its SBA guarantee.  (page 16)

Here are some other things that may be important or relevant for you:

Please see all of our prior updates at this link or if you would like to be added to our email list, please click here

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

FEAR – What will you do?

As a leader of a businesses or organization, you have the power to choose which way you want to handle a crisis.  Are you going to put your head in the sand and hope for a recovery or do something about it proactively to improve your chances for survival?

As I have read on the Internet (so it must be true), FEAR has two meanings:

Forget Everything And Run

or

Face Everything And Rise.

I think these acronyms are important reminders of how you make decisions about the direction of your business or organization.  Are you playing offense, defense or a mix of both?  What are you doing to better position your business or organization for the recovery?  How are you handling your business or organizational FEAR?

If you need some guidance, check out a good article that I recently read from the Harvard Business Review.  It talks about shifting your organization from panic to purpose.

You don’t have to choose to participate in a downturn.  

Here are some other things that may be important or relevant for you:

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

More PPP info (or confusion) & Lunchspirations Podcast Registration

We have the start of another week and the data keeps coming.

Coming up on Wednesday 4/8/2020 from 12-1pm, James Sanders will be doing a live online interview for Lunchspirations (hosted by Karl Diffenderfer) to talk about business disaster recovery programs and other issues surrounding businesses in this environment.  If you would like to register to attend, the link is available here.

Other than that, here is some information that we think is of value for you:

  1. PPP – More confirmations have come through of loan pre-approvals.  Check out the latest from the Hustle — the two items below are pretty informative:
    1. Hustle Small Business Resource Guide
    2. Reddit Guide for Small Businesses (from the list of links in the  Hustle Small Business Resource Guide):  the stories shared on here provide some good anecdotal evidence of business owners experiences applying for the different disaster recovery programs.
  2. Wells Fargo puts a cap on their PPP loan participation.  Check out the story here.  If you have not applied as of yet, I would recommend you reach out to your lender or one of the contacts on the linked list.  FYI, the list below is documents one lender is requiring to put the loan application into the system.
      1. Most recent business tax return
      2. 2019 Total Gross Sales/Revenue (we just need the dollar amount)
      3. Year Business was Established
      4. Driver’s License (FRONT AND BACK) for all owners > 20%
      5. 940 AND 941 reports  (12/31 and 3/31/20)
      6. Payroll report from 2/15/20 (or closest date)
      7. Annual payroll report for 2019 year end
      8. Did you apply for the $10K Advance from EIDL (if yes, have you received the $10K?)
    1. PPP Questions I am hearing most often today:
      1. Is there a size limitation for a small business other than <500 employees?
        1. According to the interim final rule, a small business is “ defined in section 3 of the Small Business Act (15 USC 632), and subject to SBA’s affiliation rules under 13 CFR 121.301(f) unless specifically waived in the Act.”    So, what does that mean.  Well, the SBA has a good link to help you determine if you are a small business.  The link is here.  If you have any questions, please let me know.
      2. What happens if I apply for the PPP loan, bring back all of my workforce and then have to subsequently let people go because of the current situation during the first eight weeks?
        1. Essentially, you would have a low interest loan for any amount that does not qualify for forgiveness that could be paid back at any time.
    2. Upcoming Webinars
      1. NFIB & VP Pence provide a Coronavirus Update (4/7/2020 from 11am-12pm):  The live streaming link is available here.
      2. Attract Capital (Dave Barnitt, dbarnitt@attractcapital.com):  See the linked announcement for a Coffee Chat scheduled for next Tuesday April 7th, 10am.   
      3. Huntington Bank, COVID-19 SMAR Talk Weekly Webinar, Wednesday April 8, 2020, 1pm-2pm:  The registration link is here.

Please see all of our updates at the following link:  https://mpl-law.com/resource-center/

As always, please don’t hesitate to email myself, Andy Miller (amiller@mpl-law.com) or Christian Miller (cmiller@mpl-law.com) or anyone in our office with any questions or comments.