Organization: MCAA

Automatic Forgiveness?: Treasury Secretary Mnuchin recently suggested publicly that the SBA should consider forgiving all PPP loans and forgoing the process of the forgiveness application. This would, of course, be a stunning change in direction with respect to the mechanics of loan forgiveness. There has been chatter for a while that the SBA may seek to forgo applications on “small” loans as a vast majority of the loans issued were below $150k. This would substantially reduce the workload of the lenders and SBA when it comes to processing applications, and is appearing more and more likely as the days roll on, though the actual dollar threshold is a moving target. 

EIDL Loans: As we all know, the EIDL loan program was funded and gained a lot of traction/interest at the same time as the PPP roll out. Many companies clamored to gain access to the loan product as a result of its favorable terms (30 year repayment, 4% max rate, no personal guarantee for small loans). Withum is starting to see clients identify onerous covenants and reporting requirements (e.g., quarterly financial reports and year-end reviewed financials). There does not appear to be uniformity among all EIDL loan agreements, if you received an EIDL loan, it is important to review your agreement to ensure you have clearly identified all reporting requirements that are connected with the loan.

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the employer payroll tax deferral and employee retention credits (ERC) that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CARES Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible.  If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation.  Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

WASHINGTON, DC – On Monday, July 20, the U.S. Department of Labor published additional guidance for workers and employers on how the protections and requirements of the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Families First Coronavirus Response Act (FFCRA) affect the workplace as workplaces reopen amid the coronavirus pandemic. The guidance from the Department’s Wage and Hour Division (WHD) includes commonly asked questions and answers that address critical issues in all three laws. 

“The U.S. Department of Labor understands how critically American workers and employers need this information as they return to work. Continuing to provide it remains a top priority for the Wage and Hour Division,” said Wage and Hour Division Administrator Cheryl Stanton. “With so many workers and employers committed to the greatest comeback the American workforce has ever seen, we are providing ongoing guidance to help them better understand their rights and responsibilities to protect workers and help ensure a level playing field for employers as our economy recovers.” 

Today’s guidance is the latest addition to compliance assistance materials the WHD has published. These materials include a Fact Sheet for Employees, a Fact Sheet for Employers and a Questions and Answers resource about paid sick and expanded family and medical leave under the FFCRA. WHD has also produced two guidance posters, one for federal workers and one for all other employees, that fulfill notice requirements for employers obligated to inform employees of their FFCRA rights; Questions and Answers about posting requirements; and simple Quick Benefits Tips to determine how much paid leave the FFCRA allows workers to take.

FFCRA will help the U.S. combat and defeat the coronavirus by reimbursing, through tax credits, American businesses with fewer than 500 employees for the cost of providing employees with paid leave taken for specified reasons related to the coronavirus. The legislation enables employers to provide such paid leave, while at the same time ensuring that workers are not forced to choose between their paychecks and the public health measures needed to combat the virus.

WHD provides additional information on common issues employers and employees face when responding to the coronavirus and its effects on wages and hours worked under the Fair Labor Standards Act and job-protected leave under the Family and Medical Leave Act at https://www.dol.gov/agencies/whd/pandemic

For more information about the laws enforced by the WHD, call 866-4US-WAGE, or visit www.dol.gov/agencies/whd

Alston & Bird have released their July 20 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Alston & Bird have released their July 13 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

Alston & Bird have released their July 6 COVID-19 update, including the latest news on emergency funding, administrative and regulatory actions, workplace and home issues, and many other topics, as well as to links to all their past updates.

New PPP Bill Passed by House and Senate:  The Bill that was introduced and passed by the Senate on Tuesday, June 30 has now been passed by the House and is headed to the President’s desk for signature.  This Bill extends the application deadline for the PPP an additional 5 weeks (recall that the deadline was June 30, 2020 and they still had about $130 billion in available funds).  It is unclear how valuable this additional time will be since most businesses that wanted funds have already received them.

New Stimulus Package in the Works:  Treasury Secretary Steven Mnuchin told a House panel that the administration would support a new stimulus package if it was put forward. He also indicated that he is in discussions with the Senate about revising the PPP to provide additional support to hard hit industries such as restaurants, hotels, etc.  We are not sure yet how the P4 Bill that was passed by the House (which allows businesses to obtain a second PPP loan under certain circumstances) will fare if the Senate decides to take it up, but there appears to be bipartisan support to find a solution.

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible. If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation. Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

New PPP Bill Introduced in the Senate:  On Tuesday, June 30th, the Senate passed a bill which extends the application deadline for the PPP an additional 5 weeks (recall that the deadline was June 30th and they still had about $130 billion in available funds).  The bill still needs to go through the House and would need to be signed by the President to be passed into law.  It is unclear how valuable this additional time will be as most believe that those businesses who wanted funds have already received them.

When Will Banks Accept Applications?:  Many have inquired regarding when they can apply for forgiveness and when banks will accept applications.  Withum has heard that one bank has reached out to its clients to inform them that if they received their PPP loan in April, the bank will accept a forgiveness application in August.  If the loan was received after April, the date the bank will accept the application is TBD.  This is of course just one bank, but they have generally seen that banks are not in a position to accept applications currently and few have been explicit in how they will manage the process.  They also have not seen any mechanism for a borrower to “declare” that they want to keep their eight-week covered period if they want to.  At this point, borrowers will just have to be patient, they do not believe that there are any proactive steps required on the borrowers side right now other than being in consistent contact with their lender on the process.

Status of the P4 Bill:  The P4 bill that was introduced by the House two weeks ago has not moved since it first came into play.  This bill would allow certain borrowers to obtain a second PPP loan if they meet certain criteria (less than 100 employees, 50%+ reduction in revenue).  There is not much information on the probability of this passing or how it will interplay with the PPP extension bill noted above. 

Main Street Lending Programs:  Withum reported on the general parameters of the MSLPs previously, at this point the program is still not available to the public.  Anecdotally there have been mixed reviews from banks, many of which have indicated that they do not intend to participate in the program. 

New FAQs:  It has been rumored for several weeks that a multitude of new FAQs are coming out in the near future to cover current open questions and to provide clarification.  Withum believes this is correct but do not have insight as to when they are coming, it could be as soon as this week. 

Reminder Section:  (what should I be doing):

• Talk to your payroll company about claiming the payroll tax deferrals and employee retention credits that were made available in the CARES Act.
• Talk to your payroll company about claiming the qualified sick/family leave refundable tax credits (from FFCRA, passed prior to the CAREs Act).
• Consider speaking with your lender to discuss changes to terms of existing debt facilities.
• If you have already received a PPP loan, start forecasting how you intend to spend the funds and how you can qualify for the highest amount of loan forgiveness possible. If you are not forecasting 100% loan forgiveness, then most likely you should seek assistance regarding your particular situation. Withum believes the vast majority of borrowers should expect and plan to receive 100% loan forgiveness.

The IRS has released Notice 2020-50, which offers added guidance and relief for retirement plan participants taking pandemic-related distributions and loans under the CARES Act. Notice 2020-50 expands the definition of qualified individuals under the Act and provides guidance regarding coronavirus-related distributions and loans. Lindabury, McCormick, Estabrook & Cooper, P.C. have prepared a summary outlining the details, including the criteria for eligibility.