• Pat McGibbon

Key Takeaways from Paycheck Protection Program Webinar: Understanding PPP Loans



AMT recently hosted a webinar on the Paycheck Protection Act featuring experts from Cooley LLP and M&T Bank. Webinar participants learned who is eligible, how to apply, what information to send, how the loans are structured, and how to calculate the loan amount. Members asked more than 40 questions addressing key points of the process and program. All the information is available on video. I encourage you to begin your application process by watching it.


The PPP is part of the newly enacted CARES Act which provides $349 billion in loans as a direct incentive for small businesses to keep their workers on payroll. What’s the incentive? In addition to no guarantees, no collateral, deferred payments, and low interest rates, a PPP loan may be forgiven in its entirety if employers retain (or return) employees on payroll through June 30th and use 75% or more of the loan for payroll costs. The other 25% of the loan proceeds may be used for other specified expenses like rent, mortgage interest, or utilities.


Panelists Jack Lavoie and Michelle Garcia Schulman, Partners, Cooley LLP, and Peter Lee, Vice President, M&T Bank, covered many issues relevant to the PPP law, diving into details such as exclusions in the process of constructing payroll information. On other case-specific subjects, they provided general direction and advice. The panelists are working with AMT to keep us informed on new developments in the PPP loan process as they happen. Immediately following the webinar, we received a question from a member on loan eligibility and foreign ownership; we’ve paraphrased the panelist’s response here:


Initially, the SBA application included an indication that 20% or more foreign ownership in a business would result in a denial of the loan or ineligibility. However, the most recent application removed the indication. The form now asks whether the United States is the principal place of residence for all employees included in the applicant’s payroll calculation. As long as a company meets the less-than-500-employees criterion (and can make the certifications, etc.), a foreign parent does not prevent a small business from being eligible as long as the applicant has a place of business in the United States, operates primarily in the United States, or makes significant contributions to the U.S. economy through taxes and use of U.S. materials and labor. One caveat is still unclear: whether or not non-U.S. employees are included in that count (i.e. the affiliate rule’s applicability to the parent). Here’s a link to the most current application Latest Version of Application Form.


SBA-approved lenders started accepting applications and issuing loans last week. Although applications are being accepted through June 30, 2020, PPP loans will only be granted until funding is exhausted. Given the limited appropriation and the high demand, prospective borrowers should consider applying as soon as possible. 


If you need guidance based on your unique situation, I encourage you to contact your lawyer or consider engaging Jack or Michelle to develop further clarification. You can contact Jack at jlavoie@cooley.com or Michelle at mschulman@cooley.com. Please be aware that there may be additional charges for their services. 


Resources:

SBA tool to find a nearby lender eligible to issue a loan under the Paycheck Protection Program. LATEST APPLICATION VERSION SBA Field Offices List PPP Loan Information 

Affiliation Rules for the Paycheck Protection Program 

CARES Act Overview from BB&T

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