Paycheck Protection Program

Originally published on April 14, 2020. Last updated as of October 9, 2020. On October 8, the SBA simplified the forgiveness process for PPP loans of $50,000 or less.  If your PPP loan was $50,000 or less, and your affiliates together have not borrowed $2,000,000 or more, your PPP loan is exempt from forgiveness reduction due to reductions in full-time equivalent (FTE) employees or in employee salary or wages and you can utilize a new Loan Forgiveness Application – SBA Form 3508S. This up-to-date guide summarizes the key terms of the PPP, including with respect to the forgiveness aspect…
Since the enactment of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, millions of businesses have applied for and received a Paycheck Protection Program (the “PPP”) loan from the U.S. Small Business Administration (the “SBA”) (for the current terms, laws and rules governing the PPP see our client alert:  Paycheck Protection Program – Where Are We Now?).  Recipients of PPP loans (“PPP Recipient”) that are the subject of a subsequent Sale Transaction[1] will likely be at risk of heightened scrutiny by the SBA and other relevant government agencies, the public, and…
On April 28, 2020, Treasury Secretary Mnuchin announced that companies that received loans of more than $2 million through the Paycheck Protection Program (“PPP”) of the CARES Act will be closely scrutinized.  Mr. Mnuchin’s announcement followed public outcry after reports surfaced that large, and even publicly-traded, companies received loans through the PPP, which can be forgiven if used for payroll and certain other expenses, such as commercial rent and utilities.  Mr. Mnuchin stated that any loan greater than $2 million would be subjected to a full review before being forgiven and that the Small Business Administration (“SBA”), the agency backing…
In a Q&A published this morning, the Small Business Administration (SBA) made some significant clarifications concerning the certification every PPP Borrower is required to make that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”  Noticeably, despite the fact that under the CARES Act, the SBA rule that a borrower be unable to obtain credit elsewhere does not apply to the PPP, the new guidance states that in making the certification, a borrower should take into account other sources of liquidity it has.  It also specifically notes that it is unlikely that a…
The new $349 billion Payment Protection Program (“PPP”) administered by the Small Business Administration under the CARES Act began accepting loan applications on April 3, 2020, with more than $4.3 billion of loans processed on the first day alone. Proceeds of these loans may be used for payroll, utilities, rent and mortgage payments.  While many private credit lenders may lend to portfolio companies that are ineligible for participation in the program in light of the current regulations with respect to affiliation, other private credit lenders (particularly those with SBIC vehicles) are receiving an influx of requests from their  borrowers for…
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act“) approved by Congress and signed by the President on March 27, 2020 will provide approximately $2 trillion in financial assistance to businesses and individuals to combat the effects of the COVID-19 pandemic. This client alert focuses on key provisions of Title I of the CARES Act (Keeping American Workers Paid and Employed Act) that we believe are particularly relevant for asset managers and other businesses able to meet the small business eligibility requirements for the Small Business Administration (the “SBA“) loan programs that have been expanded under the CARES…