Today, the US House of Representatives passed the second phase of funding for the Paycheck Protection Program, providing another $310 billion in funding for the forgivable small business loans.  President Trump has said he plans on signing the bill tonight.

This means tens of thousands of applications pending at banks and other lending institutions throughout the country can now be funded.

It is not clear if this supplemental funding will mean full funding for the program.  Many businesses, sole proprietors and 1099 contractors have not yet even filed their applications.

When the Paycheck Protection Program (“PPP”) ran out of funds last week, many of our nation’s small businesses hardest hit financially by COVID 19 were left without relief.  And, reports that hundreds of millions of PPP dollars when to large, publicly traded companies led to strong criticism of the program.  Over the last few days, we’ve learned that Ruth’s Chris Steak House, Potbelly, and even Harvard got millions of dollars in PPP funding.

New guidance

On the heels of attacks over this use of PPP funds, the U.S. Small Business Administration (SBA) has issued new guidance that sends a strong message that PPP funds secured by large companies that don’t really need the money may need to be paid back.

The SBA added the following question today to its “Frequently Asked Questions” document: Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?

You can read the full answer here (see question 31).  In summary, the answer reminds us that as part of the application process all PPP borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”

Successful public companies likely cannot make good faith certification of need

The answer to the FAQ also points out that it is unlikely that “a public company with substantial market value and access to capital markets” is able to make that certification in good faith.  According to the guidance, if such a company does make that certification, it needs to be prepared to provide the SBA with a basis for the certification.

What if such company already took PPP money?

Finally, the answer to the FAQ gives direction on what a company should do if it already made a certification of need that may not be supportable.  Essentially, it needs to pay the loan back by May 7, 2020:

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

Conclusion

Finney Law Firm will continue to provide updates as more guidance is given by the SBA on the Paycheck Protection Program.  If you have questions about the PPP, please feel free to contact Rebecca L. Simpson at 513.797.2856.

Here is the podcast from today on 550 WKRC Radio with Brian Thomas. The broadcast starts at 69:50.

The discussion in this show again addressed the Finney Law Firm suit on behalf of Tanya Hartman and her business, Gilded Social, a bridal dress shop, who desires a due process hearing on the forced closure of her business in the COVID-19 crisis.

Contact Christopher P. Finney (513.943.6655) if you care to discuss your rights as a business owner under a COVID-19 closure order.

As society changes the way we communicate and receive information, social media has become a more important medium for communicating with the government. This is all the more so as public meetings are moving toward “virtual meetings” on the internet.

When a public body or government official posts on social media and allows comments, it opens a “public forum.” It is well settled constitutional law that government actors cannot pick and choose who may speak in a public forum, and it most certainly cannot discriminate based upon the viewpoint or content of the speaker’s message.

SORTA, the Southwest Ohio Regional Transit Authority – operator of Cincinnati’s bus system – posted on its Facebook page regarding its then plan to offer free fares. Our client, Jordan Arnold, posted a comment suggesting that rather than offer free fares, that the bus system should shut down during the Coronavirus pandemic. SORTA then deleted Mr. Arnold’s comment and blocked him from being able to comment on any of its posts. SORTA left other comments that were supportive of SORTA’s decision undisturbed

By deleting Mr. Arnold’s comment, SORTA stifled Arnold’s speech in a public forum that SORTA itself opened.  SORTA went further by blocking Arnold, but not others, from commenting at all on any of its Facebook posts. There can only be one reason for specifically targeting Mr. Arnold for deleting and blocking – that SORTA was specifically attempting to silence a critical voice. This is the textbook definition of viewpoint discrimination. Other citizens who share SORTA’s viewpoint are permitted to comment, but Mr. Arnold, who does not share SORTA’s position, is silenced.

Just as President Trump may not block critics from commenting on his social media posts, neither may SORTA.

Federal law provides a remedy. Finney Law Firm, along with Curt Hartman, brought suit on behalf of Mr. Arnold pursuant to 28 U.S.C. § 1983, seeking injunctive relief and damages. Via the injunction, we seek to force SORTA to restore Mr. Arnold’s comment and cease blocking him from commenting on its social media posts. Further we seek financial compensation for the damages Arnold suffered by having his speech stifled.

The complaint and motion for injunctive relief are available below and online here and here. Sharon Coolidge’s Cincinnati Enquirer’s coverage of the lawsuit is available here.

If a public official or government body has deleted or blocked your comments on social media, there is a remedy. Email or call Julie Gugino (513) 943-5669.

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Here is the podcast from today, starting from the top of the show.

The discussion in this show addressed the Finney Law Firm suit on behalf of Tanya Hartman and her business, Gilded Social, a bridal dress shop, who desires a due process hearing on the forced closure of her business in the COVID-19 crisis.

We lost yesterday in getting a Temporary Restraining Order to stop Ohio’s practices without due process. The Judge has called for a Preliminary Injunction hearing for May 11.

Contact Christopher P. Finney (513.943.6655) if you care to discuss your rights as a business owner under a COVID-19 closure order.

Tens of thousands of Ohio businesses have been forcibly closed due to the order of Ohio Health Director Dr. Amy Acton, who on her own decided which categories of businesses would be deemed “essential” and “non-essential” during the COVID-19 crisis.

Today, a hearing was held before Judge Algenon Marbley, Chief Judge of the United States District Court for the Southern District of Ohio, on a motion for Temporary Restraining Order in the case of Hartman et al. v. Acton et al.  In that case, Finney Law Firm attorneys Curt C. Hartman, Rebecca L. Simpson and Christopher P. FInney along with the 1851 Center for Constitutional Law argued simply that Tanya Hartman and her bridal shop, Gilded Social, are entitled to a due process hearing as to whether retail shops such as hers are properly categorized as “non-essential” and therefore subject to mandatory closure by the State.  In other words, she simply asked for a hearing to ascertain the propriety of her closure under Ohio law and the US Constitution.

Now, I preface this by noting that I previously have appeared in front of Judge Marbley, and not only respect him as a Judge, but genuinely like him . He has at all times shown himself to be a knowledgeable and wise jurist, and a kind man as well.

Today, Judge Marbley, for a variety of reasons, ruled that Ms. Hartman and tens of thousands of similarly-situated businesses in Ohio have no right to a due process hearing following their forced closure by the State — at least on the emergency basis sought.

Rather, he scheduled a second hearing on May 11 on a Preliminary Injunction, a similar kind of relief but one that would last until resolution of the merits of the case.

One reason enunciated by Judge Marbley I found particularly unfortunate for the decision was that Ohio could not possibly hold hearings for the tens of thousands of businesses who might appeal their closure order. In other words, that due process would simply be overwhelming to the state bureaucrats if that right was recognized.

This notion is a frightening one indeed, reminding me of the forced internment of more than 120,000 US citizens of Japanese heritage during World War II without due process. In 1944, Fred Korematsu (Korematsu v. United States, 323 U.S. 214 (1944)) challenged the “yellow scare” incarceration of Japanese Americans based solely upon their ancestry. Naturally, the outrageous, unconstitutional and racist Order was borne of fear that Japanese Americans might hold dual loyalties and harm the United States  during the War.  The U.S. Supreme Court ultimately upheld President Roosevelt’s Executive Order 9066 that resulted in that forced internment, citing that irrational fear.  From Wikipedia:

In a majority opinion joined by five other justices, Associate Justice Hugo Black held that the need to protect against espionage by Japan outweighed the rights of Americans of Japanese descent. Black wrote that: “Korematsu was not excluded from the Military Area because of hostility to him or his race”, but rather “because the properly constituted military authorities…decided that the military urgency of the situation demanded that all citizens of Japanese ancestry be segregated from the West Coast” during the war against Japan.

Can you imagine if Justice Black had added as a reason for that now-discredited decision that the U.S. Courts could not possibly sustain petitions for freedom by 120,000 individuals? It would deeply offend our claim as a nation to equal justice under the law. What if the Governor incarcerated all 10,000,000 Ohioans (which effectively he has done)? Would it be an exception to a Habeas Corpus petition that the system would be overwhelmed to provide justice to that many Ohioans?

We don’t lose our Constitutional rights when everything is going swimmingly. Rather, they become subverted from circumstances that instill such fear in our populace that the Courts elect to ignore the clear meaning of our Constitution. In other words, fear drives bad court decisions.

Today, the State of Ohio repeatedly played the fear card — the boogie man of disease and death — if we simply afforded Ohio businesses due process rights in response to the devastation of their life’s work. And it worked.

Judge Marbley has a chance to correct this unfortunate decision at the upcoming Preliminary Injunction hearing and we hope to provide him with the legal arguments and evidence he needs to reach the correct conclusion to allow due process rights to be afforded to these businessmen and women who have had their hard work and risk of capital snatched from them by unthinking, uncaring arbitrary bureaucrats.

We very much look forward to Round #2.

According to Lieutenant Governor John Husted, Ohio is working to process a massive increase in applications for Ohio unemployment benefits.  More people have applied for Ohio unemployment benefits over the last month than had applied for such benefits in the last two years.

Expanded unemployment benefits

Additionally, the CARES Act expanded unemployment benefits to cover self-employed and independent contractors and promised an additional $600 per week on top of what the state pays.  This has all resulted in slow processing times and numerous questions.

Answers to FAQs

The State is working to answer those questions and decrease processing times. Here are some updates:

  • Claim number: If you are filing a claim due to COVID 19, use the mass layoff number 2000108 on applications.
  • Self-employed and independent contractors: The State will start taking your information but anticipates it will not be able to process or pay benefits until May 15 of this year.  Once processed and approved, however, benefits will be retroactive.
  • Additional $600 per week: These additional payments should be starting now.
  • Efforts to alleviate slow processing time: Ohio Department of Job and Family services is adding 337 new employees, text-to-speech capabilities, and adding a virtual call center.
  • Funding challenges: According to Husted, without federal assistance Ohio’s unemployment system is on track to run out of funds in June, but, he says, that doesn’t mean Ohioans will lose their benefits.  State legislators are working to resolve this issue.
  • Where to apply:

Conclusion

If you have questions on this or other relief available for small businesses, self-employed, and independent contractors during the COVID 19 crisis, please contact Rebecca L. Simpson at 513.797.2856.

The SBA burned through $342 billion in Paycheck Protection Program’s (“PPP”) loan funds in just over a week. And of course it ran out of funds long before all applications were processed, leaving many businesspersons waiting to see if the program will be properly and fully funded (we think it will).

Where did the money go?

Well, the SBA has issued a good and short PowerPoint presentation on the destination of the loaned funds to date.  That is here.

If you need help accessing PPP funds or the companion Emergency Income Disaster Loan funds, please contact Rebecca L. Simpson (513-797-2856).

Over the weekend, I spoke with about a dozen 1099 or business-owner clients who (a) either still did not know about the Paycheck Protection Program or (b) did not intend to apply for various reasons.  Some discussion of that.

  1. If you don’t know about the program, educate yourself. It is broad and generous. It encompasses almost every sole proprietor, 1099 contractor and business owner in the nation.  Read about it generally here and watch this webinar for employers with W-2 employees and this webinar aimed primarily at sole proprietors and 1099 contractors.
  2. Do I have to suffer closure or severe economic damage under the COVID-19 crisis  to be eligible? No. This program makes virtually no distinction between those severely impacted and those still operating “normally.” You do need to certify some impact from the COVID-19 crisis.
  3. Isn’t this just another SBA loan program with lots of paperwork and loan fees? No, not at all.  (a) First, it is a “forgivable loan.” (b) The primary condition is that you must continue to employ your employees for 8 weeks (or call them back if you already laid them off) after the loan is made. (c) If you meet that and a few other simple conditions, the “loan” becomes a grant. (d) It is east to apply. (e) There are no fees. (f) There is no loan guarantee.  (g) Even creditworthiness is not considered. This program is designed quickly to get cash into the hands of businesspersons so they can maintain their payroll and avoid bankruptcy.
  4. How do I apply? Call your bank.  If you need more help, contact Rebecca L. Simpson of our office (513.797.2856).  Candidly, it is fairly easy and straightforward.
  5. But I read the program already is out of money? Yes, this is true, but it appears likely that Congress is poised to authorize another $300 billion this week.  Our view is the program will be fully funded until every eligible business which applies has been funded.
  6. Does the program apply to churches and other non-profits?  The program does have special rules for churches, but it generally applies to all 501-C3s and C-19s (veterans organizations).
  7. I don’t need the money; let someone else in need have the funds. This is certainly a justification for not applying, just so you have thought this through for yourself and your business.  When this program is gone, we see it as highly unlikely it will be renewed on such generous terms.

Every businessperson has their hands full right now, navigating the shoals of uncertainty and change the COVID crisis has presented, but this program almost certainly is well worth your time and attention.

Rebecca L. Simpson

This morning, Finney Law Firm attorney Rebecca L. Simpson conducted a seminar hosted by the Cincinnati Area Board of Realtors on the Paycheck Protection Plan. A hearty thanks to Christy Beaver for pulling together this program.

This morning’s seminar focuses on how Realtors can qualify and apply for the program.

It is posted here.

This seminar comes on the heels of another seminar hosted by Empower U about the Paycheck Protection Program focusing on employers with W-2 employees.

A link to that previous webinar is here.

Please contact Rebecca L. Simpson (513.797.2856) if you need assistance with the PPP program.