Updated Information for Employers and Small Business Clients
Small Business Administration ("SBA")
Paycheck Protection Program Loan
Additional $320 Billion for the SBA’s Paycheck Protection Program
Today the President signed into law a new bill to provide an additional $320 billion for the SBA’s Paycheck Protection Program (“PPP”). We encourage business owners affected by the COVID-19 pandemic to apply as soon as possible, as the funds from the previous round of funding quickly ran about due to high demand. If you have any questions regarding your business’ eligibility for a PPP loan, or need assistance preparing your application, please feel free to contact us.  
Planning for, and Calculating, PPP Loan Forgiveness

Borrowers fortunate enough to receive a loan through the PPP must be diligent in how they use their loan proceeds and document the use of such proceeds to ensure maximum forgiveness of their PPP loan, which is potentially 100% forgivable.
Use of PPP Loan Proceeds

Generally speaking, in order for a borrower’s PPP loan to be forgiven, at least 75% of the proceeds must be used to cover payroll costs during the eight-week period after the loan is made (defined as the “covered period” in the statute). A borrower may use up to 25% of the proceeds on mortgage interest (but not mortgage prepayments or principal payments), rent and utility payments during the covered period (provided such obligations existed prior to February 15, 2020) and still be eligible for loan forgiveness. If a borrower uses less than 75% of the proceeds on payroll costs, the amount exceeding 25% used on other eligible costs will not be forgiven.

As part of applying for loan forgiveness, borrowers will be required to both certify to their lender that the loan proceeds were used in accordance with the foregoing and provide documentation to substantiate such uses as discussed below:

  • For payroll costs, borrowers will need to provide documentation verifying the number of “full-time equivalent employees” on their payroll, and such employees’ wages during the covered period, such as payroll reports, federal payroll tax filings, state income, payroll and unemployment insurance filings and documentation regarding retirement and health insurance contributions. Please note, “full time equivalent employees” is undefined in the statute and SBA guidance, but assumedly for most borrowers it is an employee working a standard 40-hour work week.

  • For mortgage interest, rent, and utility payments, borrowers will need to provide documentation to verify such expenses, such as bills, account statements, cancelled checks and payment receipts.
Therefore, it is imperative that borrowers create or retain documentation to substantiate all uses of their loan proceeds.

Reduction of PPP Loan Forgiveness

Even if the borrower has complied with the above, the amount of the loan eligible for forgiveness (the “eligible amount”) can be reduced in two important ways:

  • Head Count Reduction: The eligible amount will be reduced by a certain percentage if the borrower fails to maintain employee head count during the covered period. This percentage (for nonseasonal businesses) is calculated by dividing the average number of employees of the borrower during the covered period, by the average number of full time equivalent employees employed by the borrower during the borrowers choice of either of the following periods: (i) February 15, 2019 through June 30, 2019; or (ii) January 1, 2020 through February 29, 2020.

  • Wage Reduction: The eligible amount will also be reduced if the borrower decreases the total amount of wages paid to any employee by more than 25% during the covered period as compared to the borrower’s first fiscal quarter of 2020 (“Q1 2020”). The reduction is calculated by subtracting the wages each such employee received during the covered period from the amount of wages the employee would have received for the covered period at 75% of such employee’s Q1 2020 rate (a “reduction amount”). The aggregate amount of all reduction amounts is the amount by which the loan forgiveness is reduced. This reduction does not apply to employees whose wages were greater than $100,000 annually during 2019.
Exemptions for Restoring Head Count and Wage Reinstatements

A borrower would be exempt from the Head Count Reduction or Wage Reduction, respectively, if, by June 30, 2020:

  • The borrower has restored their full-time equivalent employee headcount for layoffs that occurred between February 15, 2020 and April 26, 2020.

  • The borrower has restored the wages of all employees whose wages were reduced between February 15, 2020 and April 26, 2020 to the level such employees were earning as of February 15, 2020.

Therefore, borrowers should create a strategy regarding employee retention and employee wage levels, as these aspects can greatly affect the amount of the PPP loan that is forgivable.

There are many considerations that must be made when establishing a plan to maximize PPP loan forgiveness. We are happy to assist borrowers with their PPP loan plan, calculating their potential loan forgiveness and applying for loan forgiveness.

Please note that the SBA is expected to issue additional guidance, which may impact the above analysis.
Should you have further questions about the CARES Act or the Paycheck Protection Program, feel free to contact our office.
Legislature Sets Stage for Remote Estate Plan Signing
By Passing Remote Notary Law
This Thursday the 23rd of April, Massachusetts joined a collection of other states and passed a bill that allows for notaries public to perform work remotely. This law allows notarization to be performed via video conferencing technology and outlines how the process that should be executed. Essentially, a Massachusetts licensed attorney, or paralegal under the direct supervision of a Massachusetts licensed attorney, may engage in a video conference with the signer and any necessary witnesses and observe them signing the documents. Platforms such as Zoom, or GoToMeeting, among others, are perfectly appropriate for facilitating these signings. It should be noted that all parties must be physically present in Massachusetts at the time of the signing. After the documents are signed by the signer and any witnesses, the originals then need to be delivered, via delivery service, courier, or other means, to the notary. Once received, a second video conference is held where the signer verifies to the notary that the document received is the same document signed in the first video conference, and then the notary will affix his or her stamp and signature to the documents. The notary should record both sessions of video conferencing and maintain the recording, and any related documents, for ten years.
This law will help facilitate the execution of many legal documents such as wills, trusts, proxies, real estate transactions, and license applications. Until now, Massachusetts has required all notarizations to be done in person, often in the presence of two witnesses. Lawyers and clients have had to choose between holding off implementation of important documents such as the above, or risking their health in order to get them completed. This legislation will provide a safe alternative for legal transactions to continue unimpeded during this public health crisis. This remote option is not intended to be permanent, however. It will be repealed three days after the state of emergency is lifted. In the meantime, if you have documents that should be addressed, including an estate plan, or other important documents, please call us to discuss how we can help you complete the documents without risking your health. We are here to help you with all of your legal needs during these uncertain times. 
We Are Here to Help in This Time of Need
Many of our clients have raised questions about remote work arrangements, essential employees reporting to work, layoffs, health insurance continuation, medical inquiries and employee privacy. 

Phifer Pinkham, LLC will remain open, subject to any additional government orders, during normal business hours to assist you with any questions you may have.

We will continue providing updates and guidance as more information becomes available.
Phifer Pinkham, LLC is a full service law firm representing businesses, their owners, and individuals in connection with their legal needs in the areas of business and corporate law, litigation, estate planning and administration, employment law, taxation, intellectual property, and non profit representation. We provide premium legal services without the Boston premium. Please contact us at (617) 409-7409 to set up an in-person or phone consultation, or please feel free to contact any of our attorneys directly at the email address links provided below.