Attorney Rebecca Simpson Heimlich

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 Business Manager Jane Schulte


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:

  1. 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

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.


Attorney Rebecca Simpson Heimlich

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:

  1. 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

Attorney Rebecca Simpson Heimlich

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).


Finney Law Firm is pleased to announce that Attorney Eli Krafte-Jacobs has obtained his Ohio title insurance license.  Eli is a part of our Commercial Real Estate Title and Closing Practice Group.

Consistent with our mission to Make a Difference for our clients, Eli works directly with the Firm’s affiliated title company Ivy Pointe Title, LLC to provide a comprehensive suite of commercial real estate title, title insurance and closing coordination services, with transparent communication and timely delivery.  Our professional team possesses the core competency and capacity to handle even the most challenging commercial real estate transactions.

Contact Eli Krafte-Jacobs, 513.797.2853.


Yesterday we posted our second blog on the SBA safe harbor for those whose PPP need certification may not have been in good faith. Yesterday evening, the SBA extended that safe harbor from May 7, 2020 to May 14, 2020.

Purpose of safe harbor

Every PPP applicant was required to certify that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Over the last several days, the SBA has issued guidance reminding PPP applications that this certification must have been made in good faith, and indicating that if it was not made in good faith, the PPP loan should be paid back within the safe harbor time period.

Safe harbor extended

The original deadline for the safe harbor was May 7, 2020. Late yesterday the SBA added question 43 to its PPP FAQ document extending that that deadline to May 14, 2020. Question 43, in part, reads:

SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?

The answer to question 43 not only extends the deadline, but also indicates that the SBA will issue further guidance before May 14 on how they will determine if a borrower made the need certification in good faith:

SBA is extending the repayment date for this safe harbor to May 14, 2020. 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. SBA intends to provide additional guidance on how it will review the certification prior to May 14, 2020.

To learn more about the safe harbor

Two learn more about the need certification safe harbor, please see our two previous blogs on it by clicking here and here. If you have questions, please contact Rebecca Heimlich Simpson or 513.797.2856.

Attorney Rebecca Simpson Heimlich

Several days ago we posted a blog on the SBA’s announcement that it plans to closely scrutinize whether borrowers’ certifications of need were made in good faith, and if the certification was not made in good faith, the borrower is advised pay their PPP funds back by May 7, 2020.

The need certification had to be made by every borrower upon application for the PPP loan, and it reads: “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

SBA direction on the need certification applies to large and small companies

Though this direction from the SBA on the need certification came on the heels of attacks on the PPP for giving millions to large, publicly traded companies, the SBA has since made it clear that this direction applies to all borrowers, large and small.  According to the SBA, they will audit all PPP loans over $2 million, and all loans, no matter the size, are subject to being audited.

Anyone who is found to have not made the certification of need in good faith could be subject to criminal and civil penalties.

How can you show your need certification was made in good faith?

Unfortunately, it is not clear what evidence the SBA will require to prove your need certification was made in good faith.  The only direction that has been given is in the SBA’s FAQ document in the answer to question 31, which in relevant part reads:

Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.  For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Borrowers should carefully consider based on their particular business, industry and circumstances whether their certification of need was made in good faith.  And, for those who have made a good faith certification, they should document the factors they considered in making that certification.

What is the safe harbor?

For any company that may not have made their certification of need in good faith, the safe harbor is included in the SBA’s Interim Final Rule posted on April 24, 2020, and reads:

Any borrower that applied for a PPP loan prior to the issuance of this regulation and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.

That safe harbor expires this Thursday, May 7,2020.


The SBA continues to issue guidance on the PPP, and that guidance often comes after it is needed and sometimes changes the rules of the PPP in the middle of the game.  Finney Law Firm is keeping a close eye on new guidance and will continue to update you through our blog.  For questions, please contact Rebecca Simpson Heimlich at 513.797.2856.



Attorney Rebecca Simpson Heimlich

As small businesses are beginning to receive and spend their Paycheck Protection Program (“PPP”) funds, many have questions on how they can spend those funds to maximize forgiveness of their loan. The CARES Act and the Small Business Administration (SBA) have given general guidance around what is required for PPP loan forgiveness, but the devil is in the details and many important questions regarding forgiveness have been left unanswered thus far.

Guidance on impact of employee declining offer of rehire

Some positive news on this topic, however, is that in its FAQ document (see question 40), the SBA has now issued guidance on this common question:

Will a borrower’s PPP loan forgiveness amount (pursuant to section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer? 

According to the FAQ document, the answer is in general “no.”  The guidance goes on, however, to note that the SBA and Treasury intend to issue an Interim Final Rule outlining the parameters for forgiveness under these circumstances, including:

  • The offer to rehire must be for the same salary/wages and same number of hours;
  • The offer to rehire must be in writing and in good faith; and
  • The employee’s rejection of the offer must be documented by the borrower.

More guidance needed on important questions

This new guidance, hopefully, signals that more will be forthcoming from the SBA and Treasury on how borrowers can maximize loan forgiveness.  Some unanswered questions that remain include:

  • For self-employed and independent contractors whose PPP loan amount is based on Schedule C, Line 31 of their IRS Form 1040, the regulations allow these individuals to pay themselves only 8 weeks of “payroll” (average net profit) out of their PPP funds. Mathematically, that 8 weeks only works out to about 74% of the loan amount, but the regulations require the borrower to spend 75% on payroll.  Will that impact forgiveness?
  • Many small businesses received loans that are larger than 8 weeks of their average monthly payroll plus their mortgage interest, rent, and utilities. Can these businesses use these extra funds to pay their employees bonuses or hire more employees?
  • Can self-rental payments be forgiven?
  • Are there parameters around rehiring to maintain the same level of full-time employees? Do you have to hire for the same positions or can you create new positions?
  • If the IRS requires you to show evidence that your certification of need was in good faith, what type of evidence will be sufficient?

These are just some of the unanswered questions surrounding forgiveness of PPP loans.  Finney Law Firm will continue to monitor guidance on PPP forgiveness as it is issued and will post updates on our blog.  If you have questions, please contact Rebecca Simpson Heimlich at 513.797.2856.

Attorney Rebecca Simpson Heimlich

If you have received Paycheck Protection Program (PPP) funds, you should be aware that the IRS has issued a notice that will increase the cost of using those funds.   According to IRS Notice 2020-32:

Specifically, this notice clarifies that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

What does this IRS ruling mean?

Normally businesses can deduct business expenses such as costs for payroll, mortgage interest, rent and utilities.   But, if you received a PPP loan and use the funds properly on those  four types of expenses so that your PPP loan is forgiven, the amount you spent on those expenses from PPP funds will no longer be deductible.

Why would the IRS make this rule?

According to the IRS, they are trying to prevent small businesses who receive PPP funds from getting what the IRS sees as a double tax benefit on the same dollars.  Normally when a loan is forgiven, the amount forgiven is counted as taxable income to the taxpayer.  In the CARES Act, Congress specifically provided that the amount of PPP loan forgiven will NOT count as taxable income.  So, the IRS sees that special tax exemption as one tax benefit.  According to the IRS, if a small business were also able to deduct the amount of PPP funds they spent to make the loan forgivable, then the deduction would be a second tax benefit on the same dollars.

The rule seems inconsistent with the intent of Congress.

While the IRS’s ruling in Notice 2020-32 is consistent with how exemptions and deductions are normally handed, it seems to run contrary to the intent of Congress in the CARES Act.  Given that Congress specifically provided that PPP loan forgiveness would not be counted as taxable income, it seems the intent of Congress was to provide small businesses with rescue funds without adverse tax consequences.  So, it will be interesting to see if Congress takes action to stop the adverse tax consequences the IRS just announced.

What does this mean for your business?

This ruling means that the cost of using your PPP funds will be higher than you likely anticipated.  If all or part of your PPP loan is forgiven, you will lose tax deductions on the business expenses you paid as directed by Congress and the SBA to make your PPP loan forgivable.


The Finney Law Firm will continue to stay on top of the latest PPP guidance and provide updates on our blog.  If you have questions, feel free to contact Rebecca Simpson Heimlich (513.797.2856).


The Finney Law Firm’s attorneys along with Maurice Thompson of the 1851 Center for Constitutional Law have been leading the legal fight against the lack of due process hearings in the Ohio “Stay at Home” order issued by the Ohio Department of Health and its Director, Dr. Amy Acton.

We have filed suit against the present Order and lost our Motion for Temporary Restraining Order at a hearing before Chief U.S. District Court Judge Algenon Marbley on April 20, 2020. He has set a further hearing on a Motion for Preliminary Injunction for Monday, May 11 at 9:00 AM.

Tonight, the Ohio Department of Health finally issued its new regulations here.