July 7

More Good News for PPP Borrowers: Simplified Loan Forgiveness Applications

On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (the Flexibility Act) into law, after lawmakers passed it almost unanimously. The original Payment Protection Program (PPP)—a key component of the Coronavirus Aid, Relief, and Economic Security Act signed in March—and the accompanying guidance issued by the Small Business Administration (SBA) and the Department of the Treasury, were criticized for imposing requirements that were too rigid to benefit many of the businesses that needed it most. As a result, lawmakers went back to the drawing board to make it easier for business owners to utilize PPP funds to keep employees on staff and businesses running.

As expected, the original loan forgiveness application was revised in alignment with Congress’s intended purpose: to give borrowers greater flexibility in using loan funds and obtaining loan forgiveness.


If you have applied for a PPP loan or are considering applying for one, here is what you should know about the new Flexibility Act’s loan forgiveness process:

  1. The original loan forgiveness application has been simplified. When the initial loan forgiveness application was released, it included eleven pages of various calculations and worksheets that overwhelmed business owners and tax professionals. The revised application is five pages and eliminates much of the complex accounting instructions while providing additional guidance to help borrowers complete the application. Some parts, such as the required PPP Schedule A Worksheet, remain unchanged.
  1. You may be eligible to use a new streamlined loan forgiveness application. The new PPP Loan Forgiveness Application Form 3508EZ streamlines the application process by further reducing the calculations and documentation required in the full form. It is three pages, and borrowers are eligible to use the application if they meet one of the following criteria:
    • – They are self-employed and have no additional employees.
    • – They did not reduce the number of employees in their workforce or the hours their employees work, and they did not reduce employee salaries or wages by more than 25 percent.
    • – They experienced a reduction in the level of their business activity due to COVID-19 restrictions or health directives, and they did not reduce employee salaries or wages by more than 25 percent.

If your business does not meet any of these criteria, you must use the full application to apply for a PPP loan. However, as noted above, that application has also been revised to make it easier for borrowers to complete.

  1. Borrowers can choose between an eight-week covered period or a twenty-four-week covered period. For borrowers who received their funds before June 5, the new applications allow them to select either the original eight-week covered period or the updated twenty-four-week covered period for their calculations. However, in order to prevent an owner from receiving a windfall, the latest interim final rule (IFR), dated June 17, 2020, explicitly restricts forgiveness of owner compensation replacement for individuals with self-employment income who file a Schedule C or F. The IFR states that forgiveness of the owner’s compensation is limited to either eight weeks of 2019 net profit for an eight-week covered period or two and a half months of 2019 net profit for a twenty-four-week covered period. This is because there could be instances in which a borrower with one employee receives a maximum loan amount of five months of payroll and then subsequently lays off the employee. If the borrower were to use the safe harbor in the Flexibility Act (which shields borrowers from reductions in loan forgiveness if they are unable to return to the same level of business activity as before February 15, 2020), the borrower would receive a windfall of the former employee’s two and a half months of payroll because the entire loan amount would be eligible for forgiveness.
  1. Failure to spend 60 percent of your loan on payroll expenses does not disqualify you from partial loan forgiveness. The text of the Flexibility Act led experts to believe that a borrower would forfeit the ability to access any loan forgiveness if the borrower did not spend 60 percent of the loan proceeds on payroll. New SBA interim final rules correct that misinterpretation by clarifying that the Flexibility Act allows business owners that use less than 60 percent for payroll costs to remain eligible for partial loan forgiveness.

We Can Help

The new deadline line for the PPP loan has been extended to August 8th. But, keep up-to-date as information regarding the loan and its deadline are continually changing . If you need help, contact an attorney to schedule a consultation and get the assistance you need. Experienced attorneys and their teams can walk you through the process and help you gather the necessary documents.

June 30

Navigating Periods of Uncertainty and Unrest as a Business Owner

Uncertainty and unrest have defined 2020. From COVID-19 and record-breaking unemployment to ideological, political, and societal conflicts, business owners have faced significant challenges to their survival and success. Regardless of their current political views or health and financial statuses, business leaders agree that they must navigate this time with care. The decisions that business owners make during difficult periods could have long-lasting effects on the business’s future success. As a business owner, here are a few things to keep in mind as you navigate these unprecedented challenges.

  1. Prioritize the protection of lives. Whether making decisions about reopening or exploring the best ways to express company values, business owners must prioritize the health and safety of their workforce and customers or clients. Failure to do so may result in the loss of valuable employees, increased health risks, and ultimately, decreased revenue, as consumers in this day and age use their dollars to speak. From a legal liability perspective, negligence in providing a safe environment for your employees and customers or clients could have significant legal ramifications.
  1. Stay informed. One of the primary lessons of 2020 is how quickly situations can change and how drastically they can impact the course of a nation. It is to your benefit as a business owner to diligently stay abreast of changes in your community and your industry. By remaining informed, you position yourself to take swift, decisive action when necessary.
  1. Review and update your business insurance coverage. At the height of the COVID-19 pandemic, many business owners looked to their business interruption insurance for relief. In most cases, however, business interruption insurance requires physical damage to insured property before coverage is activated. Other types of insurance should be considered to provide needed supplemental coverage for any future potential outbreaks. For example, some providers offer a communicable disease rider. This coverage is also known as infectious disease insurance and may cover instances where businesses must close due to an infectious disease. This coverage can be added to your typical business interruption, general liability, or key person insurance and can enhance your company’s resilience. In instances where civil unrest has resulted in structural damage to your business, business interruption insurance will likely provide coverage if you purchased it before damage to your property occurred.
  1. Display courageous leadership. More than anything, this period of uncertainty and unrest provides the opportunity to display courageous leadership as a business owner. Courageous leadership involves gathering information, making intelligent decisions, communicating your plans, and taking tangible steps to move your business forward. Business owners that lead their organizations through trying times often position themselves for long-term growth and success.  

You Are Not Alone

Speak with an attorney to help you make the necessary decisions to survive these turbulent times. If your business needs assistance drafting new policies and procedures or would like an audit of the measures you currently have in place, call our office to set up a virtual appointment with a member of our experienced team.

June 23

Retirement Updates Amid COVID-19

On May 4, 2020, the Internal Revenue Service (IRS) published questions and answers regarding retirement provisions in Section 2202 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In addition to providing aid for individuals and businesses, the CARES Act increases accessibility to funds and loans from certain retirement plans and accounts. The information the IRS recently published clarifies which individuals may benefit from the legislation and which plans and accounts are covered.

Retirement Account Rules Established by the CARES Act

Under the CARES Act, individuals may withdraw up to $100,000 in Coronavirus-related distributions from certain retirement accounts. Distributions are deemed “Coronavirus-related” if they are withdrawn from approved plans between January 1, 2020, and December 30, 2020, by individuals who have been adversely affected by COVID-19 in various specified ways (discussed below). Distributions may be taken from 401(k), 403(b), and individual retirement accounts (IRAs). Under normal circumstances, there is a 10 percent penalty for those who are under the age of 59.5 and withdraw funds from these accounts; however, the CARES Act waives this penalty.

In addition to expanding access to retirement distributions, eligible individuals may also take loans of up to $100,000 from their employer-sponsored retirement plans. Prior to the Act, the limit was $50,000 or 50 percent of the vested account balance. Any loans taken under this provision must be entered into by September 22, 2020. For existing loans, payment due dates have been extended, and repayment is not required through December 31, 2020.

Qualified Participants

Like much of the legislation pertaining to COVID-19, the retirement relief sections were designed to provide broad coverage. According to the IRS, a qualified participant is eligible for the expanded access set forth in Section 2202 if the participant, the participant’s spouse, or the participant’s dependent was either diagnosed with COVID-19 using a test approved by the Centers for Disease Control and Prevention (CDC) or has experienced adverse financial consequences caused by COVID-19. The financial adverse consequences experienced by the participant must be the result of one of the following scenarios:

  • – the participant has been quarantined, furloughed, laid off, or has experienced a reduction of work hours due to COVID-19;
  • – the participant has been unable to work due to the lack of child care caused by COVID-19; or
  • – the participant has had to reduce business hours or close a business the participant owns or operates due to COVID-19.

An individual who falls within any of these categories is eligible for the expanded distribution and loan options available under the CARES Act.

Additional Benefits for Individuals of Retirement Age

The CARES Act also temporarily suspends required minimum distributions (RMDs) from IRAs, and 401(k) and 403(b) retirement accounts. In general, once an individual reaches a certain age (currently 72), the government mandates that the individual begin taking out a minimum distribution to ensure that these retirement funds are not left untouched indefinitely. This provision is unique in that it is not limited to retirees impacted by COVID-19. The suspension also applies to:

  • – individuals who turned 70.5 in 2019 and are account holders who did not take their RMDs in 2019;
  • – individuals who are 72 years old or older and are account holders; and
  • – beneficiaries of inherited IRAs for decedents who died before 2020.

This suspension allows retirees to keep their money in the market longer. For individuals who have already taken their distributions, some may be able to redeposit these amounts via rollover provisions. In the past, the IRS allowed the rollover of funds within sixty days of withdrawal. However, under the CARES Act, the sixty-day rollover period has been extended to July 15.

A Word of Caution

Despite the various new options available under the CARES Act, it is important to carefully consider whether distributions should be taken from any accounts. The tax implications of these options vary, and they should be acted upon only after careful consideration of an individual’s personal goals and capacity.

June 18

Good News for PPP Borrowers: The New Paycheck Protection Program Flexibility Act of 2020

The landmark COVID-19 stimulus package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, has been a significant tool for assisting struggling small businesses during the current international pandemic. However, the centerpiece of this legislation, the Paycheck Protection Plan (PPP), has been a source of confusion and frustration for many business owners seeking this aid. In an attempt to alleviate frustrations and stay true to the original intent of the bill—providing cash flow to keep people employed and businesses afloat—a new bipartisan bill was passed by the Senate and signed by President Trump on June 5, 2020. The Paycheck Protection Program Flexibility Act of 2020[1] modifies and provides additional flexibility to portions of the PPP to address those needs. These are the key changes in the new act:

  • An extension of time to use funds. A major source of concern for PPP loan borrowers has been the limitation of the eight-week covered period. Only expenses incurred during this time frame were eligible for loan forgiveness. Unfortunately, many businesses were anticipating that they would not be able to utilize all of the loan proceeds during this period because of challenges like restricted operations due to mandatory stay-home orders and lockdowns, and unconventional payroll structures. The new act addresses that issue by expanding the covered period from eight weeks to the earlier of twenty-four weeks or until December 31, 2020. By extending the covered period, businesses have the flexibility to use the loan funds in a way that is more consistent with their standard practices without forfeiting their ability to take advantage of loan forgiveness.
  • A reduction in the amount required to be directed to payroll. Under guidance provided by the Small Business Administration (SBA) and the Department of the Treasury regarding PPP loans, in order to qualify for loan forgiveness of the total amount borrowed, small businesses had to spend at least 75 percent of their loan amount on payroll expenses. The new law reduces that requirement to 60 percent. This change affords business owners the opportunity to allocate the funds toward other eligible expenses such as utilities or rent without fearing the loss of loan forgiveness. However, there is a caveat: Under the language of the new law, which may be clarified by future SBA guidance, businesses must be careful to meet the lower 60 percent threshold because failure to do so will apparently result in the total loss of loan forgiveness. Previously, the forgiveness amount would have merely been reduced.
  • A change in the loan period from two to five years. The new law also changed how repayment of loans ineligible for loan forgiveness is handled. Rather than requiring the funds to be paid back within two years, the new act requires them to be paid back within five years. This amendment was effective immediately upon the law’s enactment. For businesses that have already obtained funds from lenders, the act leaves room for the lenders to make adjustments to the maturity terms for existing loans in order to comply with these improvements. Additionally, the timeline for deferring repayment has been extended. Lenders can defer all payments—principal, interest, and fees—until the loan forgiveness amount is determined.
  • Greater flexibility for rehiring employees or returning to typical workforce size. As was the case under the original PPP Act, businesses are still required to attempt to maintain or return to their prepandemic average number of full-time equivalent (FTE) employees in order to avoid a reduction in their loan forgiveness amount. However, the new law has provided more flexibility to businesses that seek to restore their workforce to previous levels. First, businesses have been given additional time—until December 31, 2020—to restore their workforces before incurring a reduction in their loan forgiveness amount. Next, small businesses that are still unable to meet the requirement due to challenges in rehiring for post-COVID-19-related reasons may be eligible for additional exemptions under the new legislation. To benefit from the exemptions, businesses must show that because of COVID-19-related orders from the federal government, they have been unable to restore their average number of FTE employees despite having made good-faith efforts to (1) restore the workforce and (2) restore the business to normal business functions. Documentation showing these good-faith attempts is required in order to avoid a reduction in the loan forgiveness amount.
  • Deferment of payroll taxes. The new act expands the number of businesses allowed to defer payroll taxes. Previously, small businesses were given the opportunity to defer payroll taxes, but businesses that had obtained PPP loans were not allowed to take advantage of this option if they also planned to seek forgiveness of their loans. Now, even borrowers who seek and receive PPP loan forgiveness can defer the Social Security tax and 50 percent of the tax on self-employment income from March 27 until December 31, 2020.

Ultimately, the PPP Flexibility Act alleviates many of the pressures small business owners were facing in an attempt to comply with the original PPP requirements under the CARES Act. In light of the changes in the new PPP Flexibility Act, an updated loan forgiveness application is anticipated. Nevertheless, one thing that has not changed is that documentation will still be a critical component of applying for loan forgiveness.


Next Steps

If you are trying to decide how to approach your PPP Loan Forgiveness Application or the allocation and use of your PPP funds, we can help. We have a team of lawyers dedicated to helping you navigate the PPP loan process. Call our office to set up a virtual meeting with our team today.


[1] Paycheck Protection Program Flexibility Act of 2020, H.R. 7010, 116th Cong. (2020) https://www.congress.gov/bill/116th-congress/house-bill/7010/text.

June 9

Key Considerations for Managing a Remote Workforce

The post-COVID-19 world will likely see a major shift toward companies maintaining remote workforces. Due to government-mandated business closures and stay-home orders, many owners and employees of small businesses have been forced to work virtually, and they have seen the benefits. Studies show that remote working increases productivity.[1] Large technology companies like Facebook and Twitter have announced that they will be implementing remote working until at least September 2020.[2] Some companies have even gone as far as to give employees the option of working from home permanently.[3] The “new normal” that many predict involves more companies maintaining a remote workforce.

As a business owner, you may be exploring the idea of permanently utilizing a remote workforce; however, you may not be aware of all of the relevant factors to consider and preparations to implement. Be sure to take the following measures as you move toward permanent virtual employment.


  1. Increase security measures for information stored in the cloud. As your company begins functioning in a paperless world, you must take appropriate steps to ensure data shared over digital cloud networks are secure. One way to increase security is to provide the specific tools employees will use in completing their tasks. For example, establish a policy allowing only company-issued phones and laptops to be used when handling work business. In complying with these measures, keep your team accountable by
    • – restricting the reception and transmission of company emails;
    • – requiring the use of secure passwords—passwords comprised of many characters, including symbols and numerals;
    • – providing guidelines regarding proper social media usage; and
    • – providing access to encrypted wireless networks.

By taking these additional precautions, a company addresses confidentiality concerns and further protects itself and its customers or clients from potential data breaches.

  1. Comply with federal and state wage laws. For business owners, understanding labor rules and laws that apply to specific situations is key for the successful implementation and continuation of a remote workforce. It is important to keep in mind that federal legislation requires employers to pay nonexempt workers for any work over forty hours in a single workweek. This is especially challenging for individuals classified as part-time workers, because tracking their time at home could be difficult and could result in a nonexempt worker exceeding the forty-hour cap. As a result, when working with a remote workforce, it is critical to create systems and structures that enable employees to indicate and record their start and end times. Additionally, most states have minimum wage requirements, with some exceeding the federal minimum wage of $7.25 per hour. If you have an employee who resides in a state whose minimum wage differs from the federal minimum wage, you are required to pay the higher of the two.
  1. Pay applicable taxes. For employers with remote employees in more than one state, payment of state taxes is a key requirement. Typically, if you and your employees are in one state, you are only responsible for paying taxes in that state. However, this rule changes if your business has a nexus to another state as determined by that state’s law. The presence of an employee in a state usually constitutes sufficient evidence of such a nexus. In these instances, you are required to pay taxes in that state.

We Can Help

We are dedicated to helping you adjust and thrive in the post-COVID-19 world. If you have any questions about developing your remote work employee policy, do not hesitate to call our office. An attorney will be available to guide you through the process. We are happy to meet with you by phone or video conference if you prefer.


[1] Scott Mautz, A 2-Year Stanford Study Shows the Astonishing Productivity Boost of Working From Home, INC. (Apr. 2, 2018),  https://www.inc.com/scott-mautz/a-2-year-stanford-study-shows-astonishing-productivity-boost-of-working-from-home.html.

[2] Kate Conger, Facebook Starts Planning for Permanent Remote Workers, N.Y. Times (May 21, 2020), https://www.nytimes.com/2020/05/21/technology/facebook-remote-work-coronavirus.html.

[3] Angus Loten, For Many, Remote Work Is Becoming Permanent in Wake of Coronavirus, Wall Street Journal (May 21, 2020),  https://www.wsj.com/articles/for-many-remote-work-is-becoming-permanent-in-wake-of-coronavirus-11590100453.

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