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PPP deadline extended to May 31

Posted March 29, 2021 in Mitchell F. Green, Robert M. Kramer, Articles, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
Thousands of small businesses scrambling to stay afloat as a result of COVID-19 are getting extra time to apply for PPP loans. By a 92-7 margin, on Friday, the Senate passed the PPP Extension Act of 2021 (“Act”), extending until May 31 the deadline for Paycheck Protection Program applications. The PPP was scheduled to sunset Wednesday, a timeline that could have prevented some 190,000 small businesses who have pending PPP applications from securing a loan. Previously, on March 16, the House passed the Act, by a 415-3 vote. This was a rare show of overwhelming bipartisan support! The Act also gives the SBA an additional 30 days beyond May 31 to process those loans. The Act now goes to President Joe Biden for his signature.

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PPP Likely Extended to May 31

Posted March 19, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Health Law, News
Small businesses got some good news on Tuesday, when the House of Representatives voted to extend the Paycheck Protection Program for two months. On Tuesday, the House passed the PPP Extension Act of 2021, by a 415-3 vote. It would extend the program to May 31, instead of the current date of March 31, and give the Small Business Administration an additional 30 days to process loans. The bill now goes to the Senate, where it is expected to be approved. It's clear that the most vulnerable small businesses will need help beyond March 31, so we must pass this extension as quickly as possible," said Sen. Cardin in a Thursday statement. "This common sense, bipartisan bill will meet the continued demand for PPP loans by giving small businesses two more months to apply and giving SBA an additional month to process the loan applications by June 30."

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New PPP FAQs – Good News for Necessity Requirement

Posted March 12, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
As addressed in previous Legal Beats, in order to qualify for a Paycheck Protection Program (“PPP”) second draw loan, the borrower must demonstrate that they had a 25% reduction in gross revenues, comparing a 2020 calendar quarter to a comparable 2019 calendar quarter (i.e., comparing the 2nd quarter of 2020 to the 2nd quarter of 2019, 3rd quarter to 3rd quarter, etc.), in order to qualify for a PPP second draw loan.  As was the case with PPP first draw loans, borrowers must certify in good faith that “current economic uncertainty makes the loan request necessary to support the ongoing operations of the borrower”.  Originally, during the early days of the PPP program, the “necessity” requirement created much uncertainty, as numerous large businesses, such as Shake Shack and Ruth Chris Steakhouse, applied for and obtained tens of millions dollars of PPP loans, resulting in the SBA reminding borrowers of their good faith certification of necessity. As a result, in a FAQ issued by the SBA last spring, it stated that loans with an original principal balance of less than $2 million will be deemed to have made the required certification concerning the necessity of the PPP loan request in good faith. 

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PPP Update - New Rule Good News for Schedule C Filers

Posted March 8, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
The US Small Business Administration (“SBA”) recognizes that many independent contractors and sole proprietors were not able to borrow sufficient funds because their net income, as opposed to their gross income, was nominal, resulting from the incurrence of ongoing operating expenses, regardless of the economic impact the COVID-19 crisis was having on their business. As a result, the SBA issued a new Paycheck Protection Program (“PPP”) Interim Final Rule (“Rule”) on March 3, 2021, which will permit independent contractors and sole proprietors who file Schedule C Business form as part of their 1040 Income Tax return to to base their PPP Loan upon their “gross income” (line 7 of Schedule C), for their first draw PPP loan, if no loan has yet been received and/or for their second draw PPP loan, if the first loan has been received and used.  The gross income reported on line 7 will still be capped at the same $100,000 as was net profit, so the maximum loan a Schedule C taxpayer may receive remains at $20,833 ($100,000 x 20.833%). 

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Biden Administration Takes Steps to Promote Equitable Access to SBA Relief

Posted February 22, 2021 in Mitchell F. Green, Robert M. Kramer, Articles, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
On Monday, February 22, President Biden announced the following changes to SBA's coronavirus relief programs to ensure equity: Specifically, on Wednesday, February 24, 2021 at 9 am ET, SBA will establish a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees. This will give lenders and community partners more time to work with the smallest businesses to submit their applications, while also ensuring that larger PPP-eligible businesses will still have plenty of time to apply for and receive support before the program expires on March 31, 2021. SBA also announced four additional changes to open the PPP to more underserved small businesses than ever before. While these changes are being implemented, SBA will work with community partners to improve the emergency relief “digital front door” and conduct extensive stakeholder outreach. And, SBA will strengthen its relationships with lender partners to advance equity goals, deliver funding efficiently, and prevent fraud, waste, and abuse. SBA will:

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HOW TO SET UP YOUR ESTATE PLAN DURING THE CORONAVIRUS PANDEMIC

Posted February 10, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News

The coronavirus global pandemic has made people confront their mortality and spurred many to think about an estate plan. If you are one of them, you may be wondering, what documents you need and how to have them prepared and executed while maintaining the safety of social distancing.

 

The estate planning documents you need during a pandemic or other crisis:

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Additional Expense Categories Eligible For PPP Forgiveness

Posted January 25, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
The Economic Aid Act (“Act”), enacted last month, as part of the stimulus legislation, which, among other things, provided for a second round of PPP loans, expands the list of expenses eligible for PPP forgiveness to now include the following: Covered operations expenditures defined as “a payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.” Covered property damage cost defined as “a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.” Covered supplier cost defined as “an expenditure made by an entity to a supplier of goods for the supply of goods that (1) are essential to the operations of the entity at the time at which the expenditure is made; and (2) is made pursuant to a contract, order, or purchase order in effect at any time before the covered period with respect to the applicable covered loan, or with respect to perishable goods in effect before or at any time during the covered period with respect to the applicable covered loan.”      

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Paycheck Protection Program resumed January 11, 2021

Posted January 18, 2021 in Mitchell F. Green, Robert M. Kramer, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News
The SBA, in consultation with the U.S. Treasury Department, reopened the Paycheck Protection Program (PPP) for First Draw PPP Loans the week of January 11, 2021. SBA began accepting applications for Second Draw PPP Loans on January 13, 2021. To promote access for smaller lenders and their customers, SBA will initially only accept Second Draw PPP Loan applications from participating community financial institutions (CFIs), which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs), and Microloan Intermediaries. Paycheck Protection Program lending will reopen to all participating lenders shortly thereafter. At least $25 billion is being set aside for Second Draw PPP Loans to eligible borrowers with a maximum of 10 employees or for loans of $250,000 or less to eligible borrowers in low or moderate income neighborhoods. Loan details The Paycheck Protection Program (PPP) now allows certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan with the same general loan terms as their First Draw PPP Loan. 

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New IFRs For Paycheck Protection Program Second Draw Loans

Posted January 10, 2021 in Mitchell F. Green, Robert M. Kramer, Articles, Asset Protection, Corporate and Taxation, Estate Planning and Probate, News

On January 6, 2021, the SBA issued interim final rules (“IFRs”) regarding the implementation of section 311 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act). The Economic Aid Act authorizes the SBA to guarantee loans under the Paycheck Protection Program (PPP), which was established under the Coronavirus Aid, Relief, and Economic Security Act. The Economic Aid Act adds a second temporary program to SBA’s 7(a) Loan Program titled, “Paycheck Protection Program Second Draw Loans.” The SBA may guarantee loans under the PPP Second Draw Program under generally the same terms and conditions available under to borrowers through March 31, 2021 (“Second Draw PPP Loans”) that previously received a PPP loan (“First Draw PPP Loans”) and have used or will use the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP Loan. The key differences between First Draw PPP Loans and Second Draw PPP Loans are described in the IFR, which explains the loan terms, eligibility requirements, and application process for Second Draw PPP Loans. The last day to apply for and receive a PPP loan is March 31, 2021.

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PPP Borrower Tax Relief Under New Act

Posted December 30, 2020 in Mitchell F. Green, Robert M. Kramer, Articles, Asset Protection, Corporate and Taxation, Estate Planning and Probate
Under the Coronavirus Response And Relief Supplemental Appropriations Act of 2021(the “Act”), passed last week by Congress and ultimately signed into law,  PPP borrowers will now be able to deduct payroll and non-payroll expenses funded with their PPP loans, and will not have to include PPP loan forgiveness in income. PPP Loan Deductibility For the majority of existing PPP borrowers, the most significant change in the PPP rules confirms that, despite recent IRS rulings to the contrary, they will not lose the income tax deduction that was originally expected to be available for payroll and non-payroll expenses funded and paid from PPP loans, which expenses are normally tax deductible. The CARES Act originally provided that the forgiveness of a PPP loan would not be included in income. Shortly thereafter, the IRS issued Revenue Notice 2020-32, which stated that expenses paid from a  forgivable PPP loan would not be deductible. The Act now clearly indicates that expenses paid with a PPP loan will be deductible! The vast majority of PPP borrowers used their loan money to pay wages, payroll tax expenses, utilities, rent, and interest, which are all normally tax deductible. 

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