Employment Law

The Small Business Administration Offers New Guidance on PPP Loans featured image

The Small Business Administration Offers New Guidance on PPP Loans

We’ve offered educational advice in the past on navigating your way through the Paycheck Protection Program (PPP), which is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. If you failed to receive funding from the first disbursement of PPP loans, the good news is that Congress recently approved additional funding into the federal program to the tune of $321 billion. Considering that the first round of funding was depleted in less than two weeks, business owners that missed out on the first installment that are interested in receiving federal funding should apply as soon as possible. 

Although there have been some challenges with the application process, there are also many challenges with how you can spend this federal money if you receive it. The Small Business Administration (SBA) continues to provide guidance on how businesses can effectively spend the money and comply with their regulations, yet this has been a challenge, as many of these guidelines are being released well after businesses have received the loans. 

Trent Cotney, CEO of Cotney Attorneys & Consultants, has previously encouraged contractors to be conservative with their approach to the PPP. He has also suggested employers keep their funds in a separate account to easily track their expenses. However, there are many other tasks employers will need to successfully tackle to navigate the PPP system, including staying up to date on the latest news and regulations. In this brief article, a Naples construction lawyer will discuss some recent guidance published by the Small Business Administration (SBA) on the PPP. 

Related: Advice for Contractors on the PPP

As this federal loan program is new and this is a unique situation, the laws and guidance related to PPP loans is constantly being updated. For this reason, business owners should always consult an attorney with any concerns they may have about PPP loans before taking action. Furthermore, if you need assistance applying for this loan program, a Naples construction attorney is standing by. 

New Guidance From the SBA on “Liquidity”

New guidance from the SBA in late April stipulated that companies that received PPP funds, but have access to “liquidity” may not be entitled to PPP funds. In other words, if you can get through this challenging time without financial assistance, you may not be eligible to receive assistance. In their updated guidelines, the SBA didn’t really elaborate further on the concept of “access to liquidity,” so many contractors have been asking a Naples contractor attorney if a credit line applies as a source of liquidity. Currently, whether or not credit lines are a source of liquidity remains a gray area by the SBA’s guidance.  

In fact, much of the guidance coming from the SBA is retroactive. As the latest guidance is released, our attorneys are reviewing the regulations and helping construction businesses determine the best course of action to take; however, in the present, it’s critical that you take a very conservative approach to accepting these funds and spending the money you receive from this new federal loan program. 

Related: 5 Tips for Navigating Through the PPP

Consult a Construction Attorney for SBA Loan Advice

If you believe that any of these retroactive guidelines have potentially impacted your ability to accept PPP funds and you have already received these funds, SBA is allowing businesses to return funds by May 7, 2020. If you believe that you may no longer be entitled to PPP funds, consult an attorney. If you currently have an outstanding application, review the new guidance. If you believe you are no longer eligible for the loan program, you can withdraw your application. 

Determining if you qualify for a PPP loan and how exactly you can spend that money is a challenging process that needs to be determined on a case-by-case basis. Employers need to self-educate themselves on this process the best they can and consult an attorney with specific questions about their PPP loan. For assistance submitting the application or real-world legal advice from a lawyer with experience in the construction industry, consult the attorneys at Cotney Attorneys & Consultants.   

If you would like to speak with a Naples contractor lawyer, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.