Emerging Markets Law

SBA Certification Questionnaire for PPP Borrowers

Posted In Coronavirus

Coronavirus

On October 26, 2020, the Small Business Administration (SBA) issued a Notice in the Federal Register seeking approval from the Office of Management and Budget (OMB) to collect information about PPP borrowers who received a PPP loan in excess of $2 million. The Notice states collection of information by the SBA would be done through the requirement that those certain PPP Borrowers complete a questionnaire (note: there is one for for-profit entities and one for non-profit entities). The Notice provides for a comment period of 30 days; meaning the published form questionnaires constitute drafts that may change to reflect comments submitted during the comment period. 

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Northern District Court of Georgia: Insurer Not Obligated to Cover COVID-19 Loses

Coronavirus

On October 6, 2020, Judge Thomas W. Thrash, Jr., Chief Judge for the Northern District Court of Georgia, held that an insurer was not obligated to cover losses two Georgia eateries sustained when they shuttered their dining rooms during the COVID-19 pandemic. Judge Thrash’s opinion is the first of its kind from any court in Georgia.

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SBA Releases Interim Final Rule for PPP Loans of $50,000 or less

Posted In Coronavirus

Coronavirus

The Small Business Administration (SBA) recently released an Interim Rule that primarily affects sole proprietors.

There are approximately 3.57 million outstanding PPP loans of $50,000 or less, totaling approximately $62 billion of the $525 billion in PPP loans. Approximately 1.71 million PPP loans of $50,000 or less were made to businesses that reported having zero employees (presumably not counting the owner as an employee) or one employee.

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President Trump’s Payroll Tax Deferral Order

Posted In Coronavirus

Coronavirus

On August 8, 2020, President Trump issued a Presidential Memorandum and Executive Order whereby the President directed the Secretary of the Treasury to allow for the deferral of the employee-portion of payroll taxes withheld under IRC Section 3101(a) (6.2% for Old-Age, Survivors and Disability Insurance) on wages earned during the period of September 1, 2020 through December 31, 2020 (“Deferral Order”).

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PPP Loans and Changes of Ownership: Considerations for M&A Transactions

Coronavirus

On October 2, 2020, the Small Business Administration (SBA) issued a Procedural Notice to provide information concerning required procedures for a “change in ownership” of an entity that has received a paycheck protection program (PPP) loan.  Prior to issuance of this Procedural Notice, the SBA regulations that govern PPP loans did not expressly address asset acquisitions/sales or even provide a detailed definition of “change of ownership” for borrowers.  Further, while most PPP loan documents required the PPP lender to consent prior to a “change of ownership,” the term “change in ownership” was not defined.  This lack of guidance and undefined language in the PPP loan documents left PPP borrowers who wanted to accomplish an asset acquisition/sale, sale of common stock or ownership or merger at risk of defaulting on their PPP loan covenants, which would require immediate repayment of their PPP loan.

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SEC Amends Definition of Accredited Investor

Posted In SEC

The SEC announced yesterday that it is adopting changes to the definition of “accredited investor” that will change the way start-ups and growing businesses can recruit investors for exempt transactions under Regulation D and Regulation A.

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Georgia COVID-19 Pandemic Business Safety Act

Coronavirus

On June 26, 2020, the Georgia General Assembly passed the Georgia COVID-19 Pandemic Business Safety Act as one of the final bills to pass out of the legislature on the last day of the 2020 Legislative Session. The Act was written and considered in response to concerns of small businesses throughout Georgia concerning potential legal liability for COVID-19 claims against owners as the economy re-opens in Georgia. While this law has not yet been signed by the Governor, it is expected to be signed. The following is a summary of the highlights of the Act.

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Payroll Protection Program Flexibility Act

Coronavirus

On June 3, 2020, the U.S. Senate passed the Paycheck Protection Program Flexibility Act which was previously approved by the House of Representatives on May 28, 2020.  The Flexibility Act was written and considered in response to concerns raised by Payroll Protection Program (PPP) loan borrowers.  While this law has not yet been approved by the President, it is expected to be signed without change.  Once signed by the President, we anticipate the Small Business Administration (SBA) and Department of Treasury will issue guidance pertaining to the Flexibility Act, including a new form forgiveness application.  The following is a summary of the highlights of the Flexibility Act and resulting changes to the PPP provisions of the CARES Act.

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Tax Deductions for COVID-19 Losses

Coronavirus

The COVID-19 disaster has caused significant financial losses for many businesses and their owners. Whether a business is owned by a sole proprietor, or by a Limited Liability Company, Partnership, or S Corporation treated as pass-through entity for income tax purposes, or by an entity taxable as a C Corporation, there are opportunities for the business and/or its owner(s) to use current year business and investment losses to obtain refunds of taxes paid in prior years.

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