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 »

Ruth Binger Talks About Response to COVID-19 Pandemic

Ruth Binger

By Ruth Binger

Ruth Binger talks with John Launius, President of Vidzu Media, about leadership and the firm’s response to the COVID-19 crisis on Leadership Factor.

If you have any questions regarding your business, contact Ruth or any Danna McKitrick attorney.


For additional COVID-19 related information, go to our Coronavirus/COVID-19 Resource Center.

The Reptilian Response to Missouri’s New Collateral Source Rule

Katherine M. Flett

By Katherine M. Flett

As discussed in “Statutory Changes in Missouri Lead to Blue Skies Ahead for Insurance Companies Facing Bad Faith Set-Ups and Collateral Source Rule Issues,” Missouri Governor Eric Greitens recently signed Missouri Senate Bill 31 into law bringing needed changes to Missouri’s collateral source rule.

Missouri Senate Bill 31 amended Missouri Revised Statute Section 490.715 to redefine the “value” of medical expenses as equating to the amount actually paid by or on behalf of a plaintiff, rather than the total amount of medical bills, prior to adjustments, contractual discounts, or write-offs.

Although the new amendment does not go into effect until August 28, 2017, one of the responses expected from the plaintiffs’ bar is one that has already been trending: refusing to proffer plaintiffs’ medical bills as evidence. This approach has been considered by some as an expansion of the “reptile approach,” an approach where the plaintiff’s attorney aims to influence the jury’s decision-making by using tactics to activate jurors’ survival instincts with the expectation that the jury will make decisions based on instinct rather than logic and reasoning. Continue reading »

Statutory Changes in Missouri Lead to Blue Skies Ahead for Insurance Companies Facing Bad Faith Set-Ups and Collateral Source Rule Issues

Laura Gerdes Long

By Laura Gerdes Long

Recent legislation signed by Missouri Governor Eric Greitens is expected to promise procedural relief from bad faith set-ups in Missouri as well as provide clarity regarding the collateral source rule.

New Legislation Affecting Bad Faith Set-Ups

Section 537.065 of the Missouri Revised Statutes allows claimants and insureds to contract to limit recovery to insurance coverage. This statute is unique to Missouri, as no other states have established such a practice by statute. Typically, the insured, while knowing that he will not be held personally responsible, agrees to either settle the claim or to not legally oppose the tort victim’s prosecution of the claim at trial. Post-trial the insurer is limited to disputing only the legal conclusion of whether coverage existed and usually barred from re-litigating any other aspect of the suit. These agreements are often used to pressure the insurance company into providing a defense where there may not be coverage or to pay policy limits on questionable claims.  They are also used as schemes whereby insureds and claimants work in concert to obtain coverage and create inflated damage awards at uncontested bench trials.

Effective August 28, 2017, Missouri House Bills 339 and 714 repeal section 537.065 and enact a new section 537.058, as well as a revised section 537.065 (as signed by Gov. Greitens). The new law will help curb the abuses associated with section 537.065 agreements by allowing insurers to intervene in underlying lawsuits. By participating in the underlying lawsuit, the insurer will be able to present a more accurate picture on liability, damages, and coverage issues. The bills further provide that an insured cannot enter into such a settlement agreement with a claimant if the insurer is providing the insured a defense without reservation, under the reasoning that an insured should not be allowed to enter into an unauthorized settlement agreement if an insurer defends without qualification. When an insurer defends under the policy, the insurer is fulfilling its policy obligations and should expect the insured to comply with its corresponding policy obligations, including the duty to cooperate and refusal to pay provisions.  As such, section 537.065, as amended, adds the following procedural protections: Continue reading »

What to Do When You Are Served with a Lawsuit

Jeffrey R. Schmitt

By Jeffrey R. Schmitt

For many individuals and businesses, being served with a lawsuit is an uncommon, or possibly even a once-in-a-lifetime, situation. Litigation can be stressful and being served with a lawsuit is often surprising as well.  However, in all situations when you or your business is served with a lawsuit, there are three simple, basic steps to best preserve your rights and protect yourself from the outset.

  1. Make Some Quick Notes

Often, as a result of the frustration or surprise associated with being served with a lawsuit, most people don’t pay attention to the details of how they were served. These details can be very important. There are specific rules and procedures about proper service of lawsuits, depending on the type of lawsuit and the court.

Take a few minutes to jot down notes related to the service. Specifically, identify the date and time of service, the manner of service including whether a sheriff or process server handed you papers or if the lawsuit was received by first-class or certified mail, and the recipient of those papers. These may be important facts for your attorney to know in determining whether or not service was proper and if you should contest service as a result.

Also, don’t assume that service is improper without getting legal advice. In some instances, service by mail or serving papers on your 16 year old son or daughter when you are not home can be proper service. Continue reading »

False Economy: Why Saving a Few Dollars on Legal Fees Now Can Cost You Big Later

A. Thomas DeWoskin

By A. Thomas DeWoskin



  • You’re about to sign a lease for your company’s new premises. Should you have a lawyer review it, or save the money?
  • You’re about to sign an employment agreement with your new employer. Should you have a lawyer review it, or save the money?
  • You and your best friend are going to start a new business. Should you have a lawyer advise you, or get the forms off the internet and save the money?

Both in jest and with some seriousness, business people, especially entrepreneurs, tend to view lawyers skeptically. Their perception is that lawyers run up fees, make simple transactions complicated, and sometimes cause deals to fall apart completely with all of their questions.

This is a short-sighted view of how attorneys can help you and your business. Experienced business minds understand that lawyers, when properly used at the beginning of a transaction rather than later after problems have developed, can be problem avoiders. And a problem avoided can be big money saved.

In the lease situation above, for example, your lawyer would be sure that you signed the lease in such a way that only your company, not you personally, would be liable. She might negotiate a provision that you don’t pay any rent while the space is being readied for your occupancy or for reduced rent if the landlord doesn’t provide promised services. An experienced attorney has seen a lot of leases, and knows the traps they often contain.

Lawyers aren’t deal breakers. Their job is to point out the potential risks in a transaction so you, the client, can decide whether those risks are worth the potential benefits of proceeding. If the risk/reward ratio isn’t to your liking, then YOU break the deal. If the risk is acceptable, then you proceed. In either event, you have made the decision in an informed and practical manner. You are in control; your lawyer, like all of your professional service providers, works for you. Your attorney’s role is to provide advice, share wisdom and insight, and help you make the business decisions. Continue reading »