I am especially proud of the drafting, mostly by Curt Hartman, in today’s Reply Brief on the Motion for Preliminary Injunction in our case to open Ohio Music Festivals: Bellwether Music Festival, LLC, et al, v. Dr. Amy Acton, et al. Even for non-attorneys, it is a great explanation of our constitutional rights to Free Speech and Equal Protection under the First and Fourteenth Amendments to the Constitution.
New Regulations regarding changes to PPP in Flexibility Act
On Friday, June 5, the Paycheck Protection Program Flexibility Act was signed into law and significantly loosened many Paycheck Protection Program (“PPP”) rules to make it easier for small businesses to use the loans in a way that will be forgivable. Two of the major changes to the PPP in the Flexibility Act where:
The loan forgiveness covered period (“Covered Period”) was extended from 8 weeks to 24 weeks, so borrowers have 24 weeks after receiving their funds to spend them
The required payroll percentage was reduced from 75% to 60%, so borrowers can spend up to 40% on covered non-payroll expenses (mortgage interest, rent, utilities)
These and other changes in the PPP Flexibility Act raised many questions about the impact of the new rules on the calculation of PPP forgiveness.
In the last few days, the Small Business Administration (“SBA”) has issued three new sets of regulations announcing revisions to prior PPP SBA regulations, to make the regulations consistent with the changes in the Flexibility Act.
Major Revision Impacting Self-employed and Independent Contractors
One of the revisions announced by the SBA raises the cap on how much self-employed and independent contractors can pay themselves out of their PPP funds.
Prior to the PPP Flexibility Act and the SBA revisions to the regulations, in general the amount that self-employed and independent contractors could pay themselves out of PPP funds was capped at the lessor of:
8 weeks (or 8/52) of 2019 net profit, OR
$15,385 per individual in total across all businesses
According to a revision issued by SBA yesterday, that cap for the 24-week Covered Period has been raised to the lessor of:
2.5 months (or 2.5/12) of 2019 net profit, OR
$20,833 per individual in total across all businesses
This higher cap applies to those who file a Schedule C or F and who use the PPP 24-week Covered Period (rather than the 8-week Covered Period). Although the Covered Period was increased from 8 to 24 weeks in the Flexibility Act, if your PPP loan was made before June 5, 2020, you may elect to have your Covered Period be the 8-week period beginning on the date of your PPP loan. If, however, you want to take advantage of the higher cap described above, you will need to use the 24-week Covered Period.
As part of our new Small Business Solutions Group, we will continue to stay on top of changes that may impact your PPP loan forgiveness and we will post updates on our blog. If you need assistance maximizing the forgiveness of your PPP loan, please contact Rebecca Simpson Heimlich at 513.797.2856.
As is reported here by Jennifer Baker of Fox 19, today Finney Law Firm filed suit against Dr. Amy Action, former director of the Ohio Department of Health, to allow planned summer music festivals to proceed.
As background, in April, we helped hundreds of Ohio businesses access PPP and EIDL loan funds (see this webinar for small businesses for and this webinar aimed at independent contractors).
But Part #2 of the PPP program is qualifying for and applying for loan forgiveness. If you don’t do Part #2 properly, you will have to re-pay the funds.
Rebecca Simpson Heimlich and Congressman Dr. Brad Wenstrup gave a detailed webinar (with a great and detailed PowerPoint) on the rules and approach to obtain forgiveness. That webinar is posted by Empower U here.
We all know that body language sometimes speaks more clearly about what we are thinking than our actual words. We know that crossing our arms while speaking (or listening) communicates that we may be closed off; rolling our eyes makes a statement that we don’t agree with what is being said; looking away may mean we are distracted or bored; and, avoiding eye contact when speaking may mean that we are not being forthright.
But there is also email body language which is the message you are conveying with the written word that may tell the recipient things about you or what you are thinking that you do not intend.
When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion. ~Dale Carnegie
Have you ever been the recipient of an email that leaves you scratching your head as to the intention behind the words? A lack of response which feels like you are being intentionally ignored? Or an email that was very short which felt as if the sender was being curt? We all have, and in defense of the sender, 99% of the time, they are well meaning and there are other reasons are behind the communication. Rushed for time, lack of proofreading or not responding because they do not have an answer (yet).
You receive an email from a client asking you a question to which you do not know the answer. You forward the email to someone else in your office who does have the answer and assume they will get back to you within a reasonable time. Meanwhile, the client waits for your response. Your colleague gets busy and does not get back to you until a week later and you then answer your client.
What is the client left with? The sense that you do not find them important or that you are too busy to handle their inquiry. In other words, they picture you with your arms folded or visualize you as stressed out with no time to handle the details. But that was not your intention at all!
How do we avoid this? When someone emails you with a question you cannot answer, reply immediately that you will need some time to obtain the answer which tells them 1) you received their email; and 2) you are on it! Blind copy yourself and then drag and drop the email into your Outlook ™ tasks or calendar for the next day so you can follow up in a timely manner.
Diligent follow up and follow through will set you apart from the crowd and communicates excellence. ~John Maxwell
Draft like you are writing a letter
Draft as the author and proofread as the recipient. An email should be drafted like a letter in that it should have a greeting and closing (i.e. Good morning/afternoon with the person’s name and a thank you or have a good day at the end). The body of your email should convey your message concisely so that no two minds can differ on what is being said or asked. If you draft the email with the reader in mind, you can avoid multiple clarifying exchanges, saving time and of course, showing your attention to detail and professionalism.
The worst distance between two people is misunderstanding. ~Anonymous
Also, it is a good idea to:
Insert a meaningful subject line so the recipient knows the nature of your email
Proofread and do not rely on spell check
Attach the attachment before you draft the email, so you do not forget at the end
Insert the recipient’s email address at the end to avoid accidently sending the email before it is complete
At the end of the day, we are all human
Your email body language may leave someone wondering if you are a kind and caring person ready to assist them or an unfriendly and burdened individual that they are bothering. Since we are all human beings dealing with other human beings, kindness always wins the day. The more words you can use in your email that reflect kindness and clear information, will not only put you in a favorable light, but also make people feel welcome and that they made the right choice by doing business with you.
Take a few extra minutes to put warm touches on your email to brighten someone else’s day. When you have clear, positive, and warm engagements in email, others will remember that and may even adopt some of your style so they can pass it on.
Use self-awareness, along with a critical inward lens, when drafting emails. Effective communication is at the heart of every good relationship both inside and outside of your business.
To learn more about effective communication and other Work Smart tools, contact Jane Schulte, 513.797.2855.
Finney Law Firm is proud to announce that Christopher P. Finney has recently become AV Preeminent Rated by Martindale-Hubbell. Martindale-Hubbell’s AV rating is the highest level of professional excellence at which a lawyer can be ranked in ability and ethics, and we are thrilled that Chris has achieved this honor.
The Martindale-Hubbell Peer Review Ratings System is based on the confidential opinions of members of the Bar and the judiciary. Martindale-Hubbell representatives conduct personal interviews with other members of the Bar to discuss lawyers under review. A consensus from fifteen judges and practicing attorneys is necessary to produce a rating. In addition, confidential questionnaires are sent to lawyers and judges in the same geographic location and/or area of practice as the lawyer being rated. Members of the Bar are instructed to assess their colleague’s legal ability and general ethical standards. Lawyers’ ratings serve as an objective indicator of a firm’s ethical standards and professional ability.
I am pleased to have reached this gold standard by this distinguished organization who has recognized lawyers for their high ethical standards and legal abilities for over a century. In an environmental where the market for legal services is highly competitive, the AV Preeminent Rating is a vital tool for prospective clients to evaluate a lawyer before engaging them for legal services.
The law firm itself received this rating back in March which provides the assurance that those needing legal services in the areas of Commercial and Residential Real Estate, Corporate Transactional, Business & Commercial Litigation, Labor & Employment Law, Small Business Solutions, Estate Planning & Administration, Public Interest Law, Bankruptcy, Personal Injury and Property Tax Valuation will receive a superior level of professional experience.
If you are one of the many small businesses that received a Paycheck Protection Program (PPP) loan, you’ve likely been wrestling with questions about how to make sure your loan is forgiven. We blogged several days ago about the unanswered questions on forgiveness and the need for guidance from the SBA.
The SBA has now provided additional guidance on PPP forgiveness in its Loan Forgiveness Application, which you can find by clicking here. You will submit this Application (or an online version of it) to your bank, or the holder of your loan, to apply for PPP forgiveness.
The Application and its instructions provide significant clarification on what is required for forgiveness and what documents and certifications you will need to provide to your bank. Here are some of the highlights:
In general, how is forgiveness calculated?
In general, forgiveness is calculated by adding your qualifying payroll costs to your qualifying non-payroll costs, and reducing that amount by “FTE” and “Salary/Hourly Wage Reductions” (if you did not maintain or restore levels of compensation and employment as required). Once you do that calculation, if you spent at least 75% of your PPP loan on qualifying payroll costs, the total you spent on qualifying payroll costs and qualifying non-payroll costs (up to the total amount of your loan) can be forgiven. (Then, obviously, if you spent more than 75% of the loan amount on qualifying payroll costs, the loan will also be 100% forgiven.)
What are the major changes to PPP loan forgiveness guidance?
The Application and its instructions provide significant new guidance on PPP loan forgiveness which changes and expands previous guidance. Here are some of the major changes:
Period you look at for forgiveness: Previously the SBA had issued guidance that PPP funds were to be spent and forgiveness was to be measured during the 8 weeks following the distribution of the funds to the borrower. This is defined as the “Covered Period.” The Application allows for a “Alternative Covered Period” for some purposes for borrowers with a biweekly, or more frequent, payroll schedule. The Alternative Covered Period begins on the first day of the borrower’s first pay period following their PPP loan disbursement date. If you are eligible for and choose to use the Alternative Covered Period, make sure you read the instructions closely as you fill out the Application, required PPP Schedule A to the Application, and the Schedule A worksheet. Even if you choose the Alternative period, some calculations still require you to use the Covered Period.
When payroll is measured: The Application clarifies that qualifying payroll costs include those paid as well as those incurred during the 8-week Covered Period or the Alternative Covered Period. So, for example, if you incur payroll costs prior to the end of the 8-week period, but those incurred amounts are not paid until your normal payroll date after the 8-week period, they still count in the forgiveness calculation. The Application makes clear, however, that payroll costs incurred and paid in the 8 weeks can only be counted once.
Expansion of qualifying non-payroll costs: The Application confirms that only 25% of PPP funds can be used for qualifying non-payroll costs, and that those qualifying costs include mortgage interest, rent, and utilities. The Application, however, expands the definitions of mortgage interest and rent to include not only interest and rent on real estate mortgages and leases, but also to “mortgage” interest and rent or lease payments on personal property. Covered non-payroll costs count in the calculation of forgiveness if they are paid or incurred during the Covered Period (the Alternative Covered Period is not applicable to the calculation of qualifying non-payroll costs), and are on obligations that were in place prior to February 15, 2020.
Calculation of reduction of loan forgiveness if employee and/or compensation levels are not maintained as required: The Application provides tables to complete and detailed instructions on how to calculate the reduction in your loan forgiveness if, in general, you do not maintain your full time employee level or you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. These calculations require you to analyze levels on an employee by employee basis during certain defined time periods and then compare those periods. The Application also confirms safe harbors for those who restore their employees and salary levels by June 30, 2020.
Although the Application and its instructions provide a great deal of guidance on PPP loan forgiveness, more guidance is still needed. We anticipate that the SBA will, over the next several days and possibly weeks, issue further guidance. Finney Law Firm will stay on top of the latest and will update you though this blog. And, if you have questions or need guidance on the Application or on the PPP in general, please contact Rebecca Simpson Heimlich at 513.797.2856.
Finney Law Firm’s new Business Manager is not an attorney, but an experienced and gifted executive for small businesses, a manager of people and capital resources. She is the author of four published books, including Work Smart, Not Hard! and BOLD Leadership. She will from time to time share her leadership and management insights in this blog.
It looks like most small businesses are going to have to hit the reset button. While we are busy “re-opening” and assessing our next steps, it is important not to lose sight of the vision and the dreams that brought us to starting our businesses in the first place. So, let’s get back on track and begin with renewed energy and focus!
When times are bad is when the real entrepreneurs emerge.
– Robert Kiyosaki, founder Cashflow Technologies Inc.
When searching for ways to grow and attract more clients and customers to our businesses, we are sometimes puzzled by those who have mastered the art of success in a seemingly effortless way. What are their secrets? They have figured out that success is the direct effect of working from the inside out. In other words, getting the best out of the people on their team. They know that:
Emotional and Creative Intelligent people are invaluable.
Hire employees with a high EQ and high CQ. Individuals with high EQ (emotional quotient) soft skills are good at critical observation, problem solving, conflict resolution, project management, teamwork, and adaptability. Individuals with a high CQ (creative quotient) are curious. They have keen intuition, improvisation and see problems as opportunities.
The things we fear the most in organizations- fluctuations, disturbances, imbalances – are the primary sources of creativity.
– Margaret Wheatley
All problems and all solutions boil down to one thing – communication.
Effective and ongoing communication is at the foundation of all successful businesses. Business owners must practice listening empathetically without formulating a reply, understand others’ unique perspectives, and seek a win/win in every communication, to the extent possible.
Change is good.
If you keep doing the same things and expect a different result, you will go insane. Be open to new ideas and ways of conducting business. Be flexible, curious and humble. Attract disruptors – those individuals who can objectively see the company’s blind spots and help pave the way to innovative solutions to nagging, ongoing problems.
Servant leadership works.
Show your employees that you care more about them as human beings than about how they can make money for your business. If you have an issue with someone, confront it, as it will not go away on its own by sheer avoidance. If you are clear, concise and kind in your delivery, most people will appreciate honest conversation and the ability to clarify a misunderstanding or the opportunity to perform at a higher level. Be a mentor rather than a director.
Not everyone is an entrepreneur.
Many business owners want to believe that their employees think like they do. They do not. If they wanted to be a business owner, they would be. Put them in positions that play to their strengths so they can work to optimal capacity and allow them to perform work in their own natural way.
Negative employees cannot remain.
As the saying goes, it only takes one bad apple to spoil the whole bunch. Even employees who perform well can have an extremely negative effect on the business if they are not rowing in the same direction and are causing turmoil in the workplace.
Governing by the dollar does not work.
Money is great – everyone needs it – but making money the primary objective skews thinking. It can interfere with employee morale and individual self-esteem. Not all work performed turns into revenue for a company (i.e. sales force versus administrative team). However, one cannot exist without the other. Build teams so strong that you cannot tell where one employee leaves off and the other one begins. Incentivize the net result.
Chase the vision, not the money, the money will end up following you.
– Tony Hsieh, CEO Zappos
To learn more about how you can recruit the best employees for your team, contact Jane Schulte, 513.797.2855.
We blogged earlier this week about a new need certification safe harbor for borrowers who received PPP loans of less than $2 million. That safe harbor was created in question 46 of the SBA’s FAQ document, and it also gave further guidance to those with loans over $2 million. Click here to read our blog about FAQ 46, the new safe harbor, and what it means for your business.
So that borrowers have time to assess their situations in light of the new guidance in FAQ 46, the SBA has now issued FAQ 47, which extends the May 14, 2020 need certification safe harbor to May 18, 2020:
Question: An SBA interim final rule posted on May 8, 2020 provided that any borrower who applied for a PPP loan and repays the loan in full by May 14, 2020 will be deemed by SBA to have made the required certification concerning the necessity of the loan request in good faith. Is it possible for a borrower to obtain an extension of the May 14, 2020 repayment date?
Answer: Yes, SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor.
To read more about the now extended May 14 safe harbor, click here. If you have questions, please feel free to contact Rebecca Simpson Heimlich at 513.797.2856
The SBA issued new guidance today which provides that If you and your affiliates combined received less than $2 million in Paycheck Protection Program (PPP) funds, you will be deemed to have made your “need certification” in good faith. Upon application, every PPP borrower was required to make a good faith need certification, which reads:
Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.
New guidance clears up confusion
Over the last several days, the SBA had issued guidance reminding borrowers that this “need certification” had to be made in good faith, and warning borrowers that if it was not made in good faith their PPP loan should be repaid by May 14, 2020. This May 14 deadline had left many questioning what the SBA would consider in determining if a borrower made the need certification in good faith, and if the PPP should be repaid by tomorrow. The SBA promised more guidance on this issue, which came today in new question 46 in the SBA’s FAQ document.
New safe harbor for those who received less than $2 million in PPP funds
The SBA defined a new safe harbor today in question 46 of its FAQ document:
Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
Answer: … SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. …
Purpose of less than $2 million safe harbor
The answer to FAQ 46 goes on to explain the reasons for this new safe harbor, including:
Those with PPP loans under $2 million are generally less likely to have had access to adequate sources of liquidity in this economic environment than those with larger loans
As PPP borrowers with more limited resources work to retain and rehire employees, this safe harbor will provide greater economic certainty
This safe harbor enables the SBA to focus its limited resources on larger loans, “where the compliance effort may yield higher returns”
Treatment of borrowers who received more than $2 million
While the answer to FAQ 46 acknowledges that those with PPP loans over $2 million may be able to show that their need certification was made in good faith, it also reiterates that the SBA will review all PPP loans in excess of $2 million. And, it provides that if the SBA determines that that the borrower “lacked an adequate basis” for the certification, then the borrower must repay the loan and will not be eligible for loan forgiveness. It further provides that if the borrower then repays the loan, the SBA will not pursue administrative enforcement.
For assistance with an application for a PPP loan or for PPP loan forgiveness, contact Rebecca Simpson Heimlich (513.797.2856).