Keeping Your Business in Business During COVID-19

Katherine M. Flett

By Katherine M. Flett



co-presented by Katherine M. Flett and Ruth Binger

Ruth Binger and Katherine Flett presented a webinar on keeping your business in business, which included employment and business strategies during the pandemic.

Maintaining a Legally Compliant Work Environment and Navigating the ‘New’ Workplace in the Face of COVID-19,” a Facebook Live webinar, was part of the Greater St. Charles County Chamber of Commerce‘s Chamber University.

Topics included: Continue reading »

President Trump Signs Paycheck Protection Program Flexibility Act

Marcia Swihart Orgill

By Marcia Swihart Orgill



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 »

PPP Loan Forgiveness Application Now Available

Marcia Swihart Orgill

By Marcia Swihart Orgill



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

Marcia Swihart Orgill

By Marcia Swihart Orgill



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.”

ppp loanIn 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 »

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

Marcia Swihart Orgill

By Marcia Swihart Orgill



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.

ppp loan

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

Marcia Swihart Orgill

By Marcia Swihart Orgill



ppp loanUPDATED 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

Hannah E. Mudd

By Hannah E. Mudd



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 »

COVID-19 and Possible Implications of Force Majeure Provisions in Contracts

Hannah E. Mudd

By Hannah E. Mudd



Many companies, across industries, are wondering if they will be able to meet their contractual obligations due to COVID-19 and its far-reaching ramifications. In fact, many government restrictions, quarantines, supply chain and transportation disruptions are already impacting many companies’ performance.

The question is whether this pandemic and its effects on businesses will excuse any delays or non-performance on contracts. Specifically, how will courts interpret force majeure provisions and will COVID-19 count as a force majeure event? Ultimately, the answers depend on many factors, including the specific language of the provision in the relevant contract, the appropriate governing law, and fact or deal-specific concerns.

Businesses need to understand how force majeure provisions are triggered, how they are often interpreted, and how they may be affected by a health crisis, act of God, or government action and whether performance truly becomes impossible, impractical, or unreasonably expensive.

Force Majeure Basics and Court Interpretations

Contracts commonly attempt to address the risk of unforeseen events outside of your company’s control that will either delay or completely prevent performance through a force majeure provision. These provisions try to reduce uncertainty, allocate the risk of specified events, and excuse your company’s performance during the event. Typically, force majeure provisions include specific qualifying events that will preclude performance and several catch-all events such as acts of God, war, pandemics, labor strikes, natural disasters, governmental action or interference.

Most jurisdictions read force majeure provisions and events narrowly to avoid undermining the stability and predictability of agreements. If a catch-all is included, narrow interpretations are again applied to include only events of the same general nature as those explicitly listed. If the list of force majeure events is open-ended or includes a broad catch-all provision, the court will conduct a foreseeability test of the event in question to determine if it was a contemplated exclusion.[1] Continue reading »

The CARES Act: Loans and Credits for Small Businesses, Sole Proprietors, and Nonprofits– Part Two

Hannah E. Mudd

By Hannah E. Mudd



The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) helps small business and individuals affected by the COVID-19 pandemic and provides much needed support to the health care field. In Part Two of our two-part series, we continue with a summary of each small business loan and credit program now available. Please keep in mind there are specific certifications required to ensure only affected businesses receive this assistance.

Employee Retention Credit – Section 2301

The CARES Act includes a one-year credit against the employer’s share of Social Security payroll taxes for any business that is forced to suspend or close its operations due to COVID-19. However, the business must continue to pay its employees during the shut-down.

A business is eligible for the credit in one of two ways:

  1. The operation of the business was fully or partially suspended during any calendar quarter during 2020 due to orders from an appropriate government authority resulting from COVID-19, or
  2. The business remained open, but during any quarter in 2020, gross receipts for that quarter were less than 50% what they were for the same quarter in 2019.

The business will then be entitled to a credit for each quarter, until the business has a quarter where it is recovered sufficiently that its receipts exceed 80% of what they were for the same quarter in the previous year. For each eligible quarter, the business will receive a credit against its 6.2% share of Social Security payroll taxes equal to 50% of the “qualified wages” paid to each employee for that quarter, ending December 31, 2020.

“Qualified wages” depend on the size of the business:

Continue reading »

The CARES Act: Loans and Credits for Small Businesses, Sole Proprietors, and Nonprofits – Part One

Hannah E. Mudd

By Hannah E. Mudd



UPDATED 4/23/20*

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), commonly referred to as the stimulus bill, was enacted on Friday, March 27, 2020 to help small businesses and individuals affected by the COVID-19 pandemic. The CARES Act also provides much needed support to the health care field. This two-part series provides a summary of each small business loan and credit program now available. Please keep in mind that specific certifications are required to ensure only affected businesses receive this assistance.

It may take a few weeks for the relevant funding to be received by small businesses. In an effort to help fill this gap, regulators are encouraging banks and credit unions to make small loans to individuals and businesses immediately and independently of the CARES Act.

Small Business Payroll Protection Loans – Section 1102

The CARES Act provides that businesses with fewer than 500 employees – including sole proprietors, independent contractors, eligible self-employed individuals, and nonprofits – will have access to approximately $350 billion in loans under Section 7 of the Small Business Act during the “covered period.” The “covered period” runs from February 15, 2020 through June 30, 2020 and the business must have been in operation as of February 15, 2020.

Theses paycheck protection loans are fully guaranteed by the federal government through December 31, 2020. Loans greater than $150,000 return to an 85% guarantee after December 31. The loans will have a maximum maturity of 10 years with an interest rate not to exceed 4%. At this time, the Treasury Department has indicated they will set the maturity at 2 years and that the interest rate shall be fixed at 1%. Proceeds may be used to cover payroll, mortgage payments, rent, utilities, and any other debt service requirements. The standard fees imposed under Section 7 of the Small Business Act are waived, and no personal guarantee is required by the business owner. The CARES Act also provides for possible deferment of repayment of the loans for a period of at least six months. However interest will accrue during this deferment.

Continue reading »