Congress Modifies Forgiveness Rules For Paycheck Protection Program Loans

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.

Posted on June 12, 2020 by Christopher I. McCabe, Esq. in Covid-19, General Comments Off

Philadelphia LBE Bidder Must Include Subcontractor LBE Compliance With Its Bid

A recent Commonwealth Court decision has clarified what is required from a bidder for a City of Philadelphia (City) contract in order to be afforded the 5% bid preference for a certified local business entity (LBE) under the City’s local bidding preference ordinance.

Under the City of Philadelphia local bidding preference ordinance, an LBE receives a 5% reduction/preference from its bid price for purposes of determining the lowest bidder for award. According to the ordinance, and the City’s local bidding preference regulations, the LBE is entitled to the LBE 5% preference so long as it will perform at least 51% of the work with its own forces, or with the forces of its certified LBE subcontractors. Pursuant to the local bidding preference ordinance, and the regulations, the bidder is required to submit with its bid its LBE certification and annual affidavit, as well as the LBE certification and annual affidavit of any LBE subcontractors it intends to use to satisfy the 51% requirement.

However, notwithstanding the plain language in the ordinance and regulations, the City’s standard bid instructions normally required only submission of the bidder’s own LBE certification, even where the bidder intended to use LBE subcontractors to satisfy the requirement that the bidder will perform at least a majority of the work under the contract.

In April 2019, the City awarded a Water Department contract to Thomas P. Carney, Inc. (Carney), an LBE whose bid price was the second lowest, but was the lowest after the local preference was applied. Carney included with its bid its own LBE certification and affidavit, but did not include any LBE paperwork for its subcontractors, even though the work involved would have been performed by Carney’s LBE subcontractors.

C. Abbonizio Contractors, Inc. (Abbonizio), the low bidder, filed for a preliminary injunction to stop the contract award to Carney, claiming that Carney’s bid was defective because it failed to include a current LBE certification and affidavit for its subcontractors. The trial court refused to enter an injunction. On appeal, the Commonwealth Court reversed, finding that:

Based upon this Court’s strict reading of Section 17-109(5)(a) of the Philadelphia Code, Carney had to fulfill the requirements in Section 17-109(5)(a)(.1), (.2), (.3) and (.4) of the Philadelphia Code when it submitted its bid in order to receive the LBE preference in accordance with the Philadelphia Code. It being undisputed that Carney did not satisfy the specific LBE preference requirements, Carney should not have received the benefit thereof. Without the LBE preference, Carney was not the lowest bidder. Rather, Appellants submitted the Project’s lowest bid. Accordingly, Appellants are likely to prevail on the merits and their right to relief is clear.

Posted on June 10, 2020 by Christopher I. McCabe, Esq. in City of Phila., Local Bidding Preference Comments Off

U.S. Treasury Department Issues New Guidance Concerning Good Faith PPP Loan Certification

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

Posted on April 29, 2020 by Christopher I. McCabe, Esq. in Covid-19, General Comments Off

Construction Activities May Resume In Pennsylvania On May 1

The temporary, Covid-19 related shutdown of the construction industry in Pennsylvania is finally coming to an end.

Beginning Friday, May 1, all construction industry businesses will be permitted to maintain in-person operations statewide in Pennsylvania, so long as their activities strictly adhere to the official guidance issued by Governor Tom Wolf, applicable public health safety measures, and applicable OSHA requirements. The official PA guidance covers residential, commercial, and public works construction activities. Local governments, like the City of Philadelphia, may, however, elect to impose more stringent requirements than those contained in the official guidance, in which case businesses will need to adhere to the more stringent requirements.

In resuming their construction activities and operations, all construction industry businesses must follow the official PA guidance for the construction industry, the applicable PA public health safety measures, and OSHA guidance for the construction workforce. Read more

Posted on April 27, 2020 by Christopher I. McCabe, Esq. in Com. of Pa., Covid-19, General Comments Off

The CARES Act Provides Emergency Financial Relief For Small Businesses Affected By The COVID-19 Pandemic

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: