We have been looking for details of the calculations of and eligibility for the second round of PPP in the most recent COVID stimulus bill. We found this excellent in article in Entrepreneur.Comhere.
Some details from the article follow (note, since the PPP “loans” are forgivable, the word “loan” essentially means “grant” for most eligible businesses):
Qualifications:
A loss of revenue of 25% or greater, for any one quarter — comparing 2019 to 2020. If your firm had swings in revenue or had a pronounced one-quarter loss due to COVID or other causes, you may be eligible even if your annual revenue did not dip by 25%.
300 employees or fewer.
Must have already used or plan to use their original PPP funding.
Loan terms:
Maximum loan limit of $2 million.
Loans of 2.5 months of payroll, which is the same as the original PPP. We are checking the legislation to see if the loan amount will change based upon increased payrolls from the original calculation (for example, if additional employees were added).
Restaurants food businesses (we are checking on the meaning of that term) qualify for 3.5 months of payroll as their loan amount.
Qualifying expenses are expanded from payroll and rent or mortgage payments in the original PPP to now include operating expenses, workplace protection costs to protect employees from COVID-19 and covered property damage.
Loan proceeds are not taxable and loan expenses are deductible (this is true for the new program and the original PPP payments).
Loans less than $150,000 have significantly simplified loan forgiveness (a one-page form).
For additional details on second round PPP loans, contact attorney Rebecca L. Simpson (513.797.2856) of Finney Law Firm.
Tonight, a second historic COVID relief bill passed both Houses of Congress and awaits signature by President Trump.
The bill provides significant supplemental relief for small business in addition to direct payments to individuals. Here are some highlights of the bill’s business provisions:
Paycheck Protection Program funds distributed under the first relief bill this spring and summer already by law were not to be counted as income, but the IRS had ruled that businesses could not count their expenditure as deductions, which essentially reversed the “tax free” nature of the forgivable loans. Under this bill, for all businesses who received the PPP this spring or summer, Congress has clarified that the expenses are deductible, which results in a benefit of another 30% or more from the previously-granted funds for businesses that are profitable.
A second round of PPP funding will be handed out, but this time it is limited to businesses with documentable and demonstrable downturn of 30% or more as a result of the COVID pandemic. Other tight conditions will apply. Thus, the pool of eligible borrowers (grantees) is far more limited than under the first PPP program. Amounts of the loans (grants) are not yet available.
In a significant give and take for landlords, Congress extended the eviction moratorium until the end of January, but they added $25 billion in assistance to tenants in arrears on their rent, allowing landlords to make application for the funds. It is expected that the Biden administration will extend the moratorium further after he takes office January 20 of next year. The applications are allowed for tenants who meet eligibility requirements, including (i) earning less than 80% of median income, (ii) at least one person in their households has lost a job and (iii) are at risk of losing housing.
Making meals and drinks for business entertainment of clients and customers 100% deductible.
The bill is 5,593 pages in length, meaning there remains a lot of dissection of its intricacies. Attorney Rebecca L. Simpson of the Finney Law Firm will be leading another EmpowerU webinar in early January covering how businesses and individuals can fully take advantage of the deductions and subsidies the bill provides. We will announce that webinar shortly.
More on the bill is detailed here in today’s Wall Street Journal.
Advancing our objective of “Making a Difference” for our clients, Finney Law Firm has made a point of briefing the various COVID relief and legal developments for our clients throughout 2020, and that will continue on this blog into 2021. Stay tuned for updates.
The State of Ohio has added two programs to further assist small businesses with the unprecedented business interruption associated with the COVID-19 pandemic crisis, (a) $125 million in Small Business Relief Grants and (b) $1.5 billion in refunds to small businesses from the Workers Compensation program. Details on both programs are below
Small Business Relief Grant.
The Small Business Relief Grant (“SBRG”) is designed to provide necessary relief to Ohio businesses that have been negatively impacted by the effects of COVID-19. The State has designated up to one hundred twenty-five million dollars ($125,000,000) of funding received by the State of Ohio from the Federal CARES Act to provide $10,000 grants to small businesses to assist in ensuring the survival and stability of these crucial businesses.
Some of the terms are:
The applicant business is a for-profit entity (corporation, LLC, partnership, joint venture, sole proprietor).
The applicant business is an employer firm with at least 1 and no more than 25 Ohio employees paid via W2 wages as of 1/1/2020, determined either by a headcount or full-time equivalent employee calculation.
NOTE: A headcount calculation should include both part-time and full-time employees. A full-time equivalent calculation equals the total hours compensated for all W2 employees in calendar year 2019 divided by 2,080.
The applicant business has a physical location in Ohio and earns at least 90% of annual revenue from activities based in Ohio.
The applicant business has been in continuous operation since January 1, 2020, except for interruptions required by COVID-19 public health orders, and has the ability to continue operations as a going concern, taking into account a potential program grant.
The applicant business has experienced revenue loss or incurred unplanned costs substantially caused by COVID-19 and a grant is necessary to help it recover from the impact of COVID-19.
The applicant business is in good standing with the Ohio Secretary of State, the Ohio Department of Taxation, and any other governmental entity charged with regulating the business.
If applicable, the applicant business has fully utilized any other government support received (including both grants and loans) by the applicant business for business expenses incurred due to COVID-19 or that can be utilized for business expenses incurred due to COVID-19.
The link for the Ohio Small Business Relief Grant program from the Ohio Development Services Agency is here.
There are also restrictions that may nullify your ability to obtain a grant. Contact Jane Schulte at Finney Law Firm for more information on how we can assist you in navigating the application process.
Workers Compensation refunds.
This is the second refund program this year, this time distributing $1.5 billion in excess funds held by the Ohio Worker’s Compensation program to Ohio employers. BWC started sending checks to up to 200,000 private and public employers in its system in late October after first applying the dividend to any unpaid balances. The dividend follows a similar dividend in April, where the average check size was $8,500.
The refunds are automatically calculated and the checks sent by the BWC. No action on the part of employers is necessary.
As the New York Times reports here, the 10-day pause in SBA funding for Paycheck Protection Program (“PPP”) applications enabled lenders to get in order and carefully complete their paperwork for tens if not hundreds of thousands of new applicants, but when the portal finally opened up today at 10:30 AM, it was overwhelmed, causing the server to crash. This allowed only a trickle of applications to be successfully processed on the first day of Round II of PPP funding.
As the article says, “bankers were expecting the money to once again run out quickly,” meaning knowledgeable market participants predict that there will be winners and losers among the contestants for a still-limited supply of federal monies. Those who get processed quickly will get full funding; those that do not may get nothing. Clearly, Congress will need to approve a third and perhaps fourth round of funding for the program to fund all eligible small businesses.
Contact Rebecca L. Simpson (513.797.2856) for help accessing PPP funds or assuring your path to their forgiveness.
We thank Empower U for hosting a Zoom.Us webinar on the Small Business Administration’s new Paycheck Protection Plan (“PPP”) and Emergency Income Disaster Loans (“EIDL”) designed to help small businesses sustain through the unprecedented economic interruption brought on by the COVID-19 pandemic crisis. The session was held on April 2, 2020 entirely virtual to remain safe.
The webinar video link is here. Please feel free to share it with others.
The attorneys on this presentation and their contact information are;
Finney Law Firm is offering individualized assistance in navigating regulations and procedures surrounding PPP and EIDL applications. For professional assistance, contact Rebecca L. Simpson. If you or your business is encountering employment-related issues arising from the COVID-19 crisis, contact Stephen E. Imm.
If you liked this free video, please consider donating to EmpowerUOhio.Org to encourage this free programming. Empower U has given more than 400 free adult education programs over the past decade, including valuable programming of this type.
There is a powerful feeling that the community is pulling together, rooting for one another, and digging deep to help each other, and we hope this information is helpful towards that end.
Also, we will continue to update the Finney Law Form blog to provide individuals and small businesses information on the programs that are available to help them through this crisis.
If you want to be added to the Finney Law Firm email updates, click here.
In response to the COVID-19 pandemic crisis gripping the nation, today Ohio Governor Mike DeWine issued an executive order addressing commercial leases and commercial mortgages in Ohio. However, from our perspective, the Order is not intended to have any binding effect, and he would have no authority under Ohio law to issue such a binding order if he so desired.
Here are the components of the order, each of which he labels as a “request,” not an Order at all:
Requesting that landlords suspend commercial lease payments for at least 90 days for “small business commercial tenants in the State of Ohio that are facing financial hardship due to the COVID-19 pandemic.”
Requesting that landlords also provide a moratorium on evictions of small business commercial tenants for a term of at least 90 consecutive days.
Requesting that mortgage lenders of Ohio-based properties forbear on collection or enforcement of such mortgage for a period of at least 90 days.
As with our prior blog on the stay-at-home Order, the Order does not seem to have any direct legal effect, but rather is designed to encourage restraint and cooperation in this difficult time all of the world is encountering.
Join Empower U tonight from the comfort and safety of your home via your laptop, tablet or cell phone for a webinar on powerful tools for small business from the federal government in the CARES Act passed last Friday.
>>> The link to sign up for the free seminar is here. <<<
If you want to email questions in advance, click here.
For specialized assistance for your company, we are offering consultation through the program for a flat $1,500 fee to help businesses through the process. Click here to get signed up and type “PPP” in the subject line of the email.
To have your email to be added to our firm mailing list and receive tonight’s PowerPoint, click here and say “add me to your list” in the subject line.
Joining us tonight are:
Attorney Rebecca L. Simpson who will lead the presentation primarily on Paycheck Protection Program and Economic Injury Disaster Loans available very shortly to small businesses.
Attorney Stephen E. Imm who will answer questions of employers and employees about the COVID-19 crisis.
Melissa Knies from US Bank who will explain how to apply for the programs.
With the advent of the COVID-19 Crisis, Finney Law Firm and Ivy Pointe Title have quickly stepped to the plate, with technology that allows for the practice of law with appropriate social distancing, with attorneys who focus on practice areas to help their clients, and with cutting edge information on emerging programs to help businesses and individuals in need.
Technology allowing for electronic interaction
Finney Law Firm and Ivy Pointe Title have carefully developed the tools to be prepared for a day such as this:
DocuSign allows for execution of documents from your computer. By federal and state law, e-signed documents are fully enforceable as with “inked” documents. Our team is licensed and trained in DocuSign technology for all documents in which clients will allow an electronic signature.
Electronic notary. Finney Law Firm and Ivy Pointe Title contracted with one of only a handful of licensed e-notaries in Ohio for exclusive provision of e-notary services. Using the platform DocVerify, we have the strongest technology to allow real estate closings and other transactions to proceed. By Ohio law, it is permissible to have documents signed and acknowledged (notarized) without person-to-person interaction via electronic signature and electronic notary.
Electronic payments. We use e-billing and credit card payments (and wire transfers and EFTs) for clients who prefer this method of billing and payment.
Electronic discovery and electronic depositions. Your litigation does not need to stop because of the COVID-19 crisis. Most of the work pre-trial can still move forward using e-mail, Zoom.US or Microsoft Teams for depositions, and motion work that can be electronically filed with almost all Courts.
Work-from-Home. If you do need to visit our offices, you will find that most of our professionals are not at their desks. Rather, they are safely (for you and them) working from home with the latest technology including Microsoft Surface laptops, Microsoft Teams Video Conferencing, Microsoft Office 365 data in the cloud, so we can access your data from anywhere in the planet, but with tremendous Microsoft security technology and backups.
Practice areas to help your business
Our business lawyers are up to date and prepared to help you through the thicket of issues that arise or are heightened with the COVID-19 crisis:
Attorney Isaac T. Heintzis proficient in contract interpretation, including how to enforce or avoid obligations under a lease or other agreement. He has already written purchase agreements with COVID-19 contingencies to extend due diligence periods to the declared end of the crisis. As you might expect, Isaac has also had many clients initiate their estate planning, or finish long-delayed estate planning work.
Attorney Stephen E. Imm heads our employment law group, and is advising clients on a myriad of new COVID-19 legislation and addressing employment law claims under previously existing law and the new enactments.
Attorney Bradley M. Gibson heads our litigation group which is dealing with a multitude of business-to-business disputes, including those arising because of the COVID-19 crisis.
Attorney Richard P. Turner runs Ivy Pointe Title and in that capacity has been using every tool at our disposal to continue to close your transactions “accurately and on time, every time.” These include closings respecting social distancing, and we stand prepared to be one of the first agencies in Ohio to implement fully electronic closings. We also can do drive-by closings where you come to our office and sign documents from your car, or we come to you and you can sign them on our car hood.
Attorney Christopher P. Finney heads our public interest practice, and the host of issues addressing government-to-business and government-to-individual interaction arising from the COVID-19 crisis.
CARES Act assistance for your small business
Congress just passed the CoronaVirus Aid, Relief and Economic Security Act, which includes the Paycheck Protection Program that will provide what essentially are grants to businesses with fewer than 500 employees and enhanced Economic Injury Disaster Loans(EIDL).
We are working furiously to meet the needs of our clients in this fast-emerging crisis. Let us know how we can help you or your small business navigate these turbulent waters to come to the other side safely and profitably.
And our hope is that each of you remain healthy throughout this pandemic.
You will soon hear the terms SBA 7(a) program and “Payroll Protection Program” as an important and significant program to help virtually every small business in the nation.
While labeled as a “loan program,” it in fact can operate as a generous grant program for any business or non-profit under 500 employees. The “loan” is 2.5 times your monthly payroll expenses. More details are available in this article from National Law Review.
The “loan” is in an amount that is 2.5 times your monthly business’ payroll, being the monthly average over the 12 months prior to the date the loan is made.
The “loan” is in a maximum amount of no more than $10 million.
The “loan” has no fees associated with it.
The “loan” requires no personal guarantees.
The “loan” requires no collateral.
The “loan” does not require proof that funds cannot be received elsewhere.
The “loan” has a simplified application process.
The “loan” will be funded quickly to avoid the economic impact of the COVID-19 crisis.
Most importantly, borrowers are eligible for loan forgiveness equivalent to the sum spent on covered expenses during the eight-week period after the loan is originated.
Covered expenses include wages, benefits, rent, mortgage payments, and utility charges.
The “loan” is forgiven if you maintain your pre-crisis level of full-time equivalent employees for eight weeks after the loan is made.
If you fall below that level of employment, your loan forgiveness is reduced in proportion to the reduction in headcount. The same applies to salary reductions.
If you already have made staffing reductions, you qualify for loan forgiveness if you re-hire back to pre-crisis levels by June 30, 2020.
You do not need to demonstrate actual economic harm in order to qualify. Rather, you simply need to make a series of good faith certifications, primarily that (a) current economic conditions necessitate the loan to support ongoing business operations, and (b) that the funds will be used to maintain payroll and address other covered expenses.
In order to apply, you need to contact an SBA-approved lender Qualified SBA lenders are awaiting further instruction from the SBA. Contact your lender to get on their email list to obtain application instructions as they become available. We will update this BLOG as new information is forthcoming.
Here is an excellent article explaining the Payroll Protection Program from Inc. Magazine.
You may contact attorney Christopher Finney (513.943.6655 (o) or 513.720.2996 (c)) at any time for more information.
With the raging COVID-19 crisis and its economic fallout, the question that we are fielding the past few days is:
How can I get out of my contract to do “X”?
Each of the three analyses below hinges on the language of the contract. Thus, “it depends.”
Contract Contingencies
First, with respect to contracts to buy companies, real estate or other assets, consider the contingencies in the contract. For example, read here and here for easy “exits” from Cincinnati Area Board of Realtors residential contracts for buyers.
“Force majeure” provisions
But what about leases, long-term supply contracts, employment contracts, construction contracts and other commercial contracts?
Many such contracts contain what is known as a “force majeure” provision that essentially contemplates precisely the situation in which we find ourselves today: Some unexpected exigency such as war, famine, or pandemic.
In its essence, a force majeure clause is a contract provision that excuses a party’s performance under a contract when certain circumstances beyond their control arise, making performance impracticable, impossible or illegal. These clauses are common in complex commercial contracts, such as a commercial lease (and we really don’t expect to actually use them). Yet here we are and they can be a business-saving resource in determining how to proceed.
Can this provision excuse your performance and let you “get out of” a contract? Well, as you might expect your attorney to say: “it depends.” It depends on the language of the contractual provision.
Here is a sample force majeure provision from a commercial contract:
In the event a party shall be delayed or hindered in or prevented from the performance of any obligation (other than a payment obligation) required under this contract by reason of strikes, lockouts, inability to procure labor or materials, failure of power, fire or other casualty, acts of God, disease, restrictive governmental laws or regulations, riots, insurrection, terrorism, war or any other reason not within the reasonable control of such party, then the performance of such obligation shall be excused for a period of such delay, and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay.
Would such a provision allow a tenant to terminate a lease? Would it allow an employer to terminate an employment contract for a term? Would it allow a manufacturer to avoid its obligations under a supply contract?
In this contractual language, we have the specific exceptions of “disease,” “acts of God,” and “restrictive governmental laws.” Since we have a disease that is arguably an “act of God,” and government-imposed shutdowns, it would seem that there are multiple bases upon which to argue for termination. But there could be countervailing arguments as well. For example, payment obligations are not excused in this sample language.
Some courts have applied force majeure clauses very narrowly, meaning that the specific occurrence has to be contemplated by a force majeure provision. Thus, is the word “disease” in your force majeure clause? Well, COVID-19 would seem to fit tightly within that definition, but does it? Hamilton County, for example, as of this writing, has no reported cases, and yet tens of thousands of people have been thrown out of work because of the fear of pandemic.
Mere diminished performance or increased expenses to perform alone likely would not be a sufficient basis to excuse performance and invoke a force majeure clause.
Business Interruption Insurance
Do you have business interruption insurance that would cover the COVID-19 pandemic consequences?
If you were prescient or cautious enough to buy business interruption coverage, that usually covers only a direct physical loss such as a fire, flood or earthquake. Some policies require that a loss be specifically designated, while other policies have no such requirement.
In the case of COVID-19, it may be tough to prove a direct physical loss but what if a workplace is contaminated and unusable due to a COVID-19 outbreak?
Possibly, business interruption coverage could be invoked if a supplier shuts down and can’t supply product or parts due to COVID-19
Additional considerations
Before triggering contingencies, invoking a force majeure provision or making a claim for insurance coverage, consider the following:
Are alternative means to perform your contractual obligations.
Will the other party to the contract consider mitigation of the performance problem, such as a rent reduction or other part-performance?
Could the parties reach a mutual agreement to terminate a contract or delay performance?
Conclusion
Virtually overnight, our firm and our clients have found ourselves in the middle of single worst crisis in perhaps 100 years. The first option should be to work towards accommodation with the other party to the contract. Beyond that, we have the options set forth above to consider for relief in this incredibly challenging environment.
Call one of our skilled and experienced attorneys if you want to explore your legal options or pursue one of these remedies.
