Recently, the President approved and signed an enhancement to the CARES Act that expands access to business loans under the Payment Protection Program (PPP). The CARES Act was created to provide relief to small and medium-sized businesses facing financial challenges from the coronavirus pandemic. The loan is meant to cover payroll costs, mortgage interest, rents, and utilities. With this new opportunity for businesses to receive funds comes the question of what this means for businesses who qualify.
Expansion of the PPP Loan Benefits
As mentioned in a previous blog, the first round of funds was quickly exhausted as countless businesses applied for PPP Loans. Many small businesses also faced complications because they did not have existing credit relationships with larger financial institutions. To solve these issues, the second round of funding includes an extra $310 billion for loans and several new tranches of loan funds.
There are ways to achieve maximum forgiveness for PPP loans. Once a business receives the funding, it starts an eight-week spend period. In order to ensure maximum loan forgiveness, the business must spend 100% of the funds before the conclusion of the eight-week period. If the entirety of the funds is not utilized, the balance must be paid back within the next two-year period.
It’s important to also note that the IRS has recently sent out a formal notice that these expenses are nondeductible. This is to ensure that while the goal of the loan is to provide financial relief to businesses, taxpayers are not to receive a double benefit.
Additionally, The SBA’s Economic Injury Disaster Loan (EIDL) program was increased by $10 billion for grants under the program and $50 billion for loans. The loans under EIDL are available to borrowers that can show they are unable to meet their existing financial obligations as a result of the COVID-19 crisis.
As states begin to reopen nonessential businesses and employees return to work, America will have a lot to consider when it comes to adjusting to our “new normal” outside of just financial concerns. The next two blogs will discuss the top things that companies and their employees will need to consider while returning to work.
Experienced Employment Law Attorney, Mediator, Arbitrator, Investigator, Legal and Media Commentator
Angela Reddock-Wright is an employment law attorney, mediator, arbitrator, and workplace/Title IX investigator in Los Angeles, CA. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing, and bullying issues. She is a regular legal and media commentator and analyst and has appeared on and provided commentary with such media outlets as Law and Crime with Brian Ross, Court TV, CNN, ABC, CBS, KTLA, KPCC Airtalk-89.3, the New York Times, the Washington Post, the LA Times, People Magazine, and Essence Magazine.
Angela also is a member of the panel of distinguished mediators and arbitrators with Judicate West, a California company that represents the gold standard in dispute resolution.
For more information regarding resources for businesses during COVID-19, connect with Angela on LinkedIn for new updates, or contact her here.
This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.