Local Forgivable Loans and PPP Update



Local Forgivable Loans and PPP Update

This past Friday, May 8th, Hamilton County Commissioner Denise Driehaus announced a new program within Hamilton County, Ohio to aid small businesses impacted by COVID-19 that were unable to obtain funding from the federal government.  The county received an allocation of $142 million from the CARES Act, $5 million of which has been set aside for the county’s own forgivable loan program.

Eligible businesses must meet the following criteria:

  • Excludes business recipients of COVID-19 federal funding/support, including PPP loans
  • Earned less than $1 million in gross revenue
  • Employ 50 or fewer employees
  • Gross revenue decrease of at least 50% due to COVID-19 (documentation should be readily available)

Eligible businesses may receive a loan up to $10,000 that becomes forgivable, similar to the PPP, if the funding is used to pay:

  • Rent
  • Utilities
  • Payroll
  • Additional costs related to new COVID-19 safety requirements (i.e. PPE, sanitizing, etc.)

Details and applications of the program should be made available this week to those business owners that are interested. We will continue to monitor this program going forward and inform you when applications become available.

While the above program is limited to only those businesses in Hamilton County, cities within the Commonwealth of Kentucky have begun creating similar initiatives.  The cities of Ft. Mitchell, Paducah, Maysville, and Covington have created similar programs with their own funding amounts and unique qualifications.  If your business resides in one of these localities, please reach out to us so that we can investigate the localities’ specific eligibility requirements.  While we anticipate many of these local initiatives to begin popping up around our region, we are working to provide you a list of funding options on the COVID-19 portion of our website.

Updates on the Paycheck Protection Program (PPP)

Last week, the Department of the Treasury and Small Business Administration (SBA) released additional FAQs that we wanted to bring to your attention:

40. Question: Will a borrower’s PPP loan forgiveness amount (pursuant to Section 1106 of the CARES Act and SBA’s implementing rules and guidance) be reduced if the borrower laid off an employee, offered to rehire the same employee, but the employee declined the offer?

Answer: No. As an exercise of the Administrator’s and the Secretary’s authority under Section 1106(d)(6) of the CARES Act to prescribe regulations granting de minimis exemptions from the Act’s limits on loan forgiveness, the SBA and Treasury intend to issue an interim final rule excluding laid-off employees whom the borrower offered to rehire (for the same salary/wages and same number of hours) from the CARES Act’s loan forgiveness reduction calculation. The interim final rule will specify that, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.

While many of you that have received a PPP loan are looking ahead on how best to spend the funds, we wanted business owners to be aware of this documentation requirement regarding rehires and the potential for employee rejection.  There has been a significant amount of attention pointed to the above situation where employees may be better off financially on unemployment given the additional $600 per week and may not be willing to accept employment offers that would otherwise put them at a financial disadvantage from their current state.  Business owners should be thoughtful in their communication to previously terminated/furloughed employees about the impact of rejecting such an offer for their long-term financial health.

45. Question: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?

Answer: Yes. An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.

As a reminder, those business that claimed forgiveness on a PPP loan are ineligible to claim both the Employee Retention Credit and deferment of payroll tax liabilities.  As indicated in the FAQ, these options would become available if a PPP loan is returned by May 14th.

Please reach out to us with any questions.