Paycheck Protection Program (PPP)

Last week, the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law, becoming effective immediately. The PPPFA reforms the Paycheck Protection Program (PPP), which was passed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and is intended to improve the terms of PPP loans obtained by small businesses to help cover payroll and other costs during the COVID-19 crisis. Certain aspects of the new law, however, may make it more difficult for some businesses to obtain full loan forgiveness.

Employers who received PPP loans after the CARES Act went into effect as of March 27, 2020, soon ran into challenges. For instance, many found that the eight-week period covered by the loan was not enough to provide the financial relief needed to stay afloat. This was particularly true for employers whose businesses were shut down as a result of state orders. Others faced unavoidable reductions to their loan forgiveness amount under the PPP’s reduction rules, based on an inability to return to pre-pandemic workforce numbers by the PPP’s June 30, 2020, deadline.
Continue Reading PPP Flexibility Act – Stretching forgiveness requirements to benefit employers

The SBA’s latest round of frequently asked questions (FAQs) about the Paycheck Protection Program (PPP) gives employers an important new tool to address one of the biggest challenges of trying to maximize PPP forgiveness: How to respond to employees who refuse to return to work by June 30, 2020.

Loan forgiveness is the cornerstone of the PPP, which was established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). To protect jobs, the PPP’s offer of loan forgiveness is in part based on an employer’s ability to maintain headcount through the COVID-19 crisis. Specifically, if between February 15, 2020 and April 26, 2020, an employer reduces its employee headcount, then the amount of loan forgiveness will be reduced. If the employer reinstates those employees by June 30, 2020, however, the loan forgiveness amount will not be reduced. Further explanation of the PPP and loan forgiveness reduction calculation can be found here.
Continue Reading Employees refusing to return to work? The SBA offers some protection of PPP forgiveness

On April 30, 2020, the Federal Reserve System, in conjunction with the U.S. Department of the Treasury, released updated guidance outlining the parameters of a program to support lending to small- and mid-sized businesses by eligible lenders.  The April 30 guidance expands on and, in several areas, supersedes prior materials published on April 9.

Known as the Main Street Lending Program (the Program), this initiative establishes new loan facilities for entities (1) with up to 15,000 employees or (2) whose 2019 annual revenue was less than $5 billion, regardless of employee headcount.  The Program’s loan facilities can take the form of either new loans (a Main Street New Loan Facility or a Main Street Priority Loan Facility) or expansions to existing loans (a Main Street Expanded Loan Facility).  These facilities are “designed to provide support to small and medium-sized businesses and their employees across the United States during the current period of financial strain by supporting the provision of credit to such businesses.”
Continue Reading Newly-updated Main Street Lending Program implicates key workplace-related considerations for U.S. employers