On June 5, President Trump signed into law the Paycheck Protection Program Flexibility Act which modifies certain provisions pertaining to the use and forgiveness of loans made under the Small Business Administration’s Paycheck Protection Program (PPP).

First, the Act extends the covered period for PPP loans from 8 weeks to 24 weeks from the date the loan is disbursed, meaning the loan proceeds can now be used during the extended period, or during the original 8-week period. Second, the Act allows up to 40% of the PPP loan proceeds to be used for non-payroll costs, such as rent and utility payments. This is an increase from the 25% ceiling initially set by the SBA rules governing PPP loans. Third, the Act extends the deferral period for re-payment of a PPP loan to the date on which  the SBA pays the forgiven loan proceeds to the PPP lender, or, if no forgiveness is sought, to 10 months after the end of the 8-week or 24-week covered period. The Act also establishes safe harbors from reduction of loan forgiveness based on reductions in full time employees due to inability to rehire employees.

The SBA intends to promptly issue new guidance and a modified PPP Loan Forgiveness Application to reflect the new rules. A joint statement by the Treasury Secretary and the SBA Administrator explaining the new PPP loan forgiveness rules can be found here.

In response to the COVID-19 pandemic, Congress passed the CARES Act which set up the SBA-administered Paycheck Protection Program (PPP) to provide for emergency financial relief in the form of forgivable loans to small businesses with less than 500 employees. My earlier post concerning the relief offered by the CARES Act can be found here. On April 24, in response to overwhelming demand, Congress authorized additional funding of $310 billion for more PPP loans.

However, on April 23, apparently in response to critical news reports that numerous PPP loans had been obtained by large, well-financed public companies, the U.S. Department of the Treasury added Question 31 to its PPP Frequently Asked Questions (FAQ) to clarify a borrower’s required good faith certification that current “economic uncertainty” makes the PPP loan “necessary” to support “ongoing operations.” The Treasury Department has also publicly announced that it will audit all PPP loans in excess of $2 million.

The Treasury Department’s new guidance now advises borrowers to assess their economic need for a PPP loan and to carefully review the required good faith certification, 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 their business. The Treasury Department guidance also establishes a “safe harbor” that specifies that any borrower, who applied for the PPP loan prior to April 23, and repays the loan in full by May 7, 2020, will be deemed to have made the required certification in good faith. Read more

On March 27, in response to the ongoing COVID-19 pandemic, President Trump signed a $2.2 trillion stimulus package known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The CARES Act provides provides for emergency financial relief to small businesses with less than 500 employees in the form of a new Small Business Administration “Paycheck Protection” loan program (available on April 3), refundable payroll tax credits, and deferrals of the employer portion of the payroll tax. In addition, the CARES Act expanded the SBA Economic Injury Disaster Loan Program, providing for an emergency loan advance of $10,000 which does not have to be repaid.

Please follow the links below for the specified information:

• My law firm’s summary of the CARES Act’s employer benefits
• The Treasury Department fact sheet on the “Paycheck Protection” loan program
• An application form for a “Paycheck Protection” loan
• An application form for an Economic Injury Disaster Loan

If you need assistance on this important issue, call or email me, or contact your banker or tax advisor.

Thank you, and please stay safe in this difficult and stressful time.

As noted in an earlier post, the Families First Coronavirus Response Act (FFCRA), which becomes effective on April 1, 2020, provides for emergency paid family leave and emergency paid sick leave related to the ongoing coronavirus pandemic and COVID-19.  While the FFCRA applies to employers with fewer than 500 employees, employers with less than 50 employees may qualify for an exemption under soon to-be-issued regulations if the employer’s viability would be jeopardized.

The U.S. Department of Labor (DOL) has now issued specific guidance on the FFCRA provisions affecting employers and employees, including that the FFCRA leave provisions are not retroactive. The DOL has also prepared a Notice Poster which must be posted by an employer in a conspicuous place on its premises, or emailed or mailed to its employees, or posted on an employee information internal or external website.

In addition to the Notice Poster, the DOL guidance covers the following topics:

• FFCRA Employer Paid Leave Requirements
• FFCRA Questions and Answers
• FAQ for FFCRA Notice Poster

Thank you, and please stay safe in this difficult and stressful time.

If you need assistance on this important issue, call or email me.  I’ll be happy to assist in anyway possible.

On March 19, 2020, in response to the difficult, unprecedented, and constantly-evolving COVID-19 national health emergency, Pennsylvania Governor Tom Wolf issued an Executive Order which has shut down the physical locations of all non-life-sustaining businesses in Pennsylvania, including all construction projects, both public and private, except for emergency repairs and projects related to health facilities. The shut down Order was effective March 19, 2020, with enforcement to begin today, March 23, 2020, at 8:00 AM. The shut down Order is subject to a waiver process that might allow certain physical work sites to remain open. Public contractors seeking a waiver of the shut down of their contracting businesses and physical work sites can find information about the waiver process here. Until a waiver is granted, the physical work sites cannot re-open. In addition, various public contractor trade associations are seeking relief from Governor Wolf’s order so that critical public highway and other public infrastructure projects can continue unabated.

The current COVID-19 pandemic and Governor Wolf’s Executive Order seem to fit squarely into the classic definition of “force majeure,” which typically includes “action or inaction by a governmental authority to the extent not caused by Contractor, war, civil riots, floods, natural disasters, fire, orders of any court or public authority having jurisdiction to the extent not caused by Contractor,” and other similar “acts of God” or circumstances beyond either party’s reasonable control.

In addition, public contractors holding contracts with Commonwealth agencies and departments are in a unique position because the public entity stopping their work is the public entity with whom they are contracting. That means the public entity is acting both in police power role and in a contracting party role.

Because this is a complicated area of the law, it is recommended that all public contractors consult with experienced legal counsel to determine whether to invoke and provide notice of force majeure to their public owner counterparts.

If you need assistance on this important public contracting issue, call or email me.  I’ll be happy to assist in anyway possible.

In response to the unprecedented COVID-19 national health emergency, Congress has passed and President Trump has signed legislation which applies to employers and employees affected by the ongoing COVID-19 pandemic. These include employers and employees working in the public contracting field.

The Families First Coronavirus Response Act (FFCRA) was signed into law on March 18, 2020, takes effect on April 2, 2020, and will remain effective through December 31, 2020. The FFCRA provides for emergency family leave and emergency sick leave benefits related to COVID-19. The FFRCA applies to employers with fewer than 500 employees. However, employers with less than 50 employees may be exempted by regulations of the US Department of Labor if the leave payments required under the FFCRA would jeopardize the employer’s viability.

My law firm Charlson Braber McCabe & Denmark has prepared a summary of the key provisions of the FFCRA. The summary can found be here.

Thank you and stay safe.