What Business Owners Need to Know About the Main Street Lending Program Expansion

UPDATED 11/9/2020

The Main Street Lending Program (MSLP) from the Federal Reserve has been expanded. With the expansion, more small and medium-sized businesses can receive support. (Click here for details on the original MSLP program requirements.)

Let’s take a look at what is included in the expansion of the MLSP from modified definitions and program requirements to the new third facility called the Main Street Priority Loan Facility. (The Federal Reserve is currently working to establish a program for nonprofit organizations, but such a program is not yet available.)

Under the newly expanded MSLP, the minimum loan amount is lowered, the maximum loan amount is increased, the principal repayment schedule and loan term are extended, and the Federal Reserve’s participation increased to 95% for all loans. The expanded MSLP is now open for lender registration and the Federal Reserve will be actively buying loans soon.

How the Expansion Program Will Operate:

President Trump Signs Paycheck Protection Program Flexibility Act

The Paycheck Protection Program Flexibility Act (Flexibility Act) makes key changes to the Paycheck Protection Program (PPP) that provide borrowers with more flexibility to obtain loan forgiveness, including extending the time period to spend PPP loan proceeds, reducing the payroll expenditure requirement for PPP loans, and extending the time period to restore employment and wage levels. The following is a summary of the modifications the Flexibility Act makes to the PPP.

1. Extension of Time to Spend Loan Proceeds. The Flexibility Act extends the covered period that a borrower must spend its loan funds from eight weeks after the loan origination date to 24 weeks or until December 31, 2020, whichever is earlier. The Flexibility Act allows borrowers that already received a PPP loan prior to enactment of the Flexibility Act to elect an eight week covered period, which may be beneficial for borrowers who have already spent most of their PPP loan proceeds and are near the end of their original eight week covered period.

2. Payroll Expenditure Requirement. The Flexibility Act reduces the payroll expenditure requirement from 75% to 60%. The remaining 40% of loan funds may still only be used for payments of interest on any covered mortgage obligation, rent and utilities.

In an Interim Final Rule issued on April 3, the SBA established the requirement that at least 75% of the PPP loan proceeds be used for payroll costs. If less than 75% of the of loan funds are spent on payroll costs, the SBA Loan Forgiveness Application requires a borrower to reduce the amount eligible for loan forgiveness. In changing the payroll expenditure requirement to 60%, the Flexibility Act added the following language to the CARES Act: “To receive loan forgiveness”, a borrower “shall use at least 60% of the covered loan amount for payroll costs.” Based on this language it is not clear whether a borrower will still be able to obtain partial loan forgiveness if the 60% threshold is not obtained. Continue reading »

Legal Guidance for Employers on Navigating New Wellness/Health Policies – On Demand Webinar

A recent survey of Missouri manufacturers by Missouri Enterprise found that understanding wellness and health guidelines due to Covid-19 is a top challenge for moving forward.

In “Legal Guidance to Help Employers Navigate New Wellness/Health Policies,” a webinar from Missouri Enterprise, I discuss major obstacles and gray areas related to protecting employees in the new normal of Covid-19.

Watch the webinar to learn how to navigate the new health order while protecting employees on the job. Questions include:

• Can employers require employees to get flu or Covid-19 vaccinations?
• What questions can an employer legally ask when an employee calls in sick?
• What can an employer do if an employee doesn’t want to return to work because they are afraid of getting sick?
• Can an employer require high-risk employees (due to age or health) to stay home?
• What information can an employer share with other employees if an employee is being tested for the virus?
• Can a company require an employee to leave work if they seem ill?
• Can an employer be held liable if an employee contacts the virus at the workplace?
• If the virus spread through the workplace, is it considered a workers’ comp injury?

Click below to watch the webinar: Continue reading »

Employers Must Report Work-related COVID-19 Cases to OSHA

Under new guidelines from OSHA, employers must record all work-related COVID-19 cases that meet the following three conditions:

1. The case is confirmed as COVID-19 as defined by the CDC.
2. The case is determined to be work-related.
3. The case results in any of the following:
   1. Death
   2. Significant injury or illness diagnosed by a medical professional
   3. Days away from work
   4. Restricted work or transfer to another job
   5. Medical treatment beyond first aid
   6. Loss of consciousness.

In addition, per the new guidelines: Continue reading »

PPP Loan Forgiveness Application Now Available

Updated 7/6/2020

The Small Business Administration (SBA) and the Department of Treasury have released the Paycheck Protection Program (PPP) Loan Forgiveness Application.

The application deadline for the Paycheck Protection Program has been extended to August 8, 2020. Updated loan forgiveness instructions and forms are available here:

PPP Loan Forgiveness Application Instructions for Borrowers

PPP Loan Forgiveness Application Form – Revised June 16, 2020

Self-Employed: Continue reading »

Safe Harbor Deadline for Repayment of PPP Loans Extended from May 14 to May 18

On May 13, 2020, the Small Business Administration (SBA), in consultation with the Department of the Treasury, extended the safe harbor deadline to repay Paycheck Protection Program (PPP) loans to May 18, 2020. Previously in its PPP Loans Frequently Asked Questions (FAQs), the SBA reminded borrowers to carefully review the required certification on the PPP loan application that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

In further guidance, the SBA provided that any borrower of a PPP loan that repays the loan in full by the specified safe harbor deadline will be deemed by the SBA to have made the required certification concerning the necessity of the loan request in good faith.  According to the newly issued FAQ #47, Continue reading »

Warning to Employers and Medical Providers Alike Regarding Releasing COVID-19 Test Results!

So, your furloughed employee[i] is returning to work – Hooray!? Not so fast. Employers and the medical providers who are treating and perhaps testing these employees/patients for COVID-19 need to be wary about who is able to disclose and use testing information and to whom.  Both sides must tread carefully and follow strict guidelines in such situations.

For over two decades, the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) has governed disclosure of an individual’s protected health information and has prevented a medical provider from unilaterally disclosing sensitive health information to employers.  Even faced with a previously unimaginable global pandemic, from its implementation in 2003, the HIPAA Privacy Rule has had procedures in place that address this thorny legal issue.

Take the following hypothetical example: An employer furloughs an employee as a reduction in work force for financial reasons. While on furlough, the rumor mill is active and the employer “hears” that this employee may have been experiencing COVID-19 symptoms while on furlough.  May the employer reach out to the employee’s medical provider to obtain medical information specifically related to COVID-19 testing? May the provider release such information if the employer contacts the provider to inquire? Work-arounds exist under the HIPAA Privacy Rule or may exist when the employer pays for COVID-19 testing.

Option 1:  Consent Upfront. Continue reading »

Additional SBA Guidance Regarding PPP Loan Business Necessity Certification and New Safe Harbor for PPP Loans of Less than $2 Million

The Small Business Administration (SBA), in consultation with the Department of Treasury,  announced additional guidance regarding the required good faith certification borrowers must make concerning the necessity of the Paycheck Protection Program (PPP) loan request. In PPP loan applications, borrowers must certify in good faith that current economic uncertainty makes the loan request necessary to support their ongoing operations.

In an update to its PPP Loan Frequently Asked Questions (FAQs) on May 13, the SBA provides a new safe harbor for any borrower that, together with its affiliates, received a PPP loan of an original principal amount of less than $2 million. These borrowers will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

As previously announced by the SBA, borrowers with PPP loans in the amount of $2 million or more, and other designated PPP loans, are subject to review by the SBA for compliance with the requirements of the PPP Interim Final Rules and the Borrower Application. According to Question 46 of the updated FAQs, Continue reading »

Safe Harbor Deadline for Ineligible Borrowers to Return Paycheck Protection Program Loans is Extended to May 14

UPDATED 5/6/2020

The Small Business Administration (SBA), in consultation with the U.S. Treasury,  published retroactive guidance regarding the loan necessity certification a borrower must make on its application for a Paycheck Protection Program (“PPP”) loan.

In its update to the list of Frequently Asked Questions (FAQs) about PPP loans issued on April 23, the SBA explained that prior to making an application for a PPP loan “all borrowers should carefully review the required certification that ‘[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.’” In making this good faith certification, the Treasury stated that all borrowers must take “into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operation in a manner that is not significantly detrimental to the business.”

Although the SBA guidance specifically questions loans made to public companies with substantial market value and access to capital markets, the guidance applies to both public and private companies.

The generality of the SBA guidance left many borrowers confused. There were news articles published about small businesses that were concerned about expending PPP loan funds despite perceived operational needs.  In a likely response to this confusion, the SBA updated its FAQs about PPP loans on May 5, indicating that it was going to provide additional guidance regarding how it would review the business certainty certification.  Additionally, the FAQ update provides that a borrower will be deemed to have made the business necessity certification in good faith if the borrower applied for the PPP loan prior to the issuance of the FAQ and repays the loan in full by May 14, 2020. The original safe harbor repayment deadline way May 7. Continue reading »

What You Need to Know About Your PPP Loan

As you are aware, the Paycheck Protection Program (“PPP”) was developed as a relief measure under the CARES Act. Unsurprisingly, the initial round of PPP funding was  fully claimed by businesses across the country. Congress passed a bill providing additional funding for PPP loans. If you previously applied for either loan, you may not need to re-apply. For more information, click here.

If you are one of the fortunate businesses to secure funding, you may be wondering – now what? Whether it be how you may use those funds or ensuring you receive maximum loan forgiveness, here’s what you need to know for your business.

Fortunately, the SBA anticipated these questions and provided some clarifying guidance for business owners. One of the most important clarifications is that no more than 25% of a PPP loan can be used for non-payroll costs if the business wants to be eligible for complete loan forgiveness. They also clarified that any interest which accrues before the loan is officially forgiven or paid in full must be repaid at the borrower’s expense. Additionally, full forgiveness will not be available if you reduce the number of full-time equivalent employees (“FTE”s) during the 8-week loan period or reduce the pay of an employee making less than $100,000 by more than 25%.

The SBA also clarified that your lender will be the one to actually determine the amount of the loan that is deemed forgivable and will have 60 days to approve or deny the forgiveness once they receive your business’ request and relevant documentation. What exactly will be required by your particular lender to demonstrate proper usage of loan proceeds and ensure maximum loan forgiveness is still unclear.

What to Track and Monitor for PPP Loan Forgiveness

We recommend creating a method to track, record, and document anything at all PPP or expense-related for the next several months.

Additionally, the following are several things to specifically monitor and keep inside this ‘file’ that will make your request for forgiveness much easier and streamlined.

1. Implications from other CARES Act Provisions. Depending on your business’ situation, you may have qualified for, and received, alternative relief under another provision of the CARES Act. You will want to evaluate the timing implications these alternatives may have on your PPP loan forgiveness before using any of the funds. Continue reading »