Gravel & Shea PC

April 2020

April 28, 2020: Treasury Department Issues New Guidance on PPP Loan Disbursement Timing and Seasonal Business Payroll Calculations

The Treasury Department issued new guidance yesterday related to the Paycheck Protection Program (“PPP”), which addresses the timing of disbursements (and the corresponding loan forgiveness period) and the loan amounts available to seasonal businesses.

The eight weeks after a PPP recipient receives its loan is period for which some, or all, of the loan expenditures could be forgiven. Determining when that eight-week period ends is critical for planning when to pay expenses and hire or rehire employees in order to maximize loan forgiveness. An interim rule issued yesterday requires each PPP loan to be disbursed in a single lump sum within ten days of approval, and clarifies that the loan forgiveness period begins immediately upon loan disbursement. For PPP loans authorized but either not disbursed or not fully disbursed by April 28, full disbursement must occur by May 8, and the eight-week period for forgivable loan spending begins (or began) on the date of the first disbursement. The interim rule also clarifies that if a borrower fails to provide all of the documentation the lender needs in order to disburse a PPP loan within twenty days of the loan approval, the PPP loan will be cancelled.

PPP loan amounts are set at 2.5 times of the borrower’s total payroll costs for a defined period. In recognition of the fact that not all seasonal businesses share the same seasonal employment peak, the Treasury Department also announced an interim ruling providing an alternate average payroll calculation period for seasonal businesses. Now seasonal businesses may request loans 2.5 times the size of either their average monthly payroll for February 15-May 10, 2019 or from any twelve-week period between May 1, 2019 and September 15, 2019. Previously, the CARES Act had only permitted seasonal businesses to take loans 2.5 times their average monthly payroll costs either for the twelve-week period beginning on February 15, 2019 or March 1-June 30, 2019.

Qualified businesses, nonprofits, veterans and tribal organizations seeking PPP loans are urged to apply as soon as possible, because the replenished PPP fund is expected to be exhausted soon. PPP applications are accepted directly by the financial institutions listed here.

Click here to read COVID-19 News and Updates

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FOR MORE INFORMATION

For more information about the Paycheck Protection Program, please contact your attorney at Gravel & Shea PC or any of the following attorneys at the firm:

Chip Mason (cmason@gravelshea.com), Cassandra LaRae-Perez (claraeperez@gravelshea.com), Oliver Goodenough (ogoodenough@gravelshea.com), Keith Roberts (kroberts@gravelshea.com), Pauline Law (plaw@gravelshea.com), or Catherine Burke (cburke@gravelshea.com

April 24, 2020: Governor Scott Announces Phase 2 of Vermont’s Gradual Economic Reopening

On Friday, April 24, 2020, Governor Phil Scott issued Addendum 11 to his initial Executive Order, which declared a state of emergency in Vermont because of COVID-19. Addendum 11 incorporates guidance (https://accd.vermont.gov/news/update-new-work-safe-additions-stay-home-stay-safe-order) from the Agency of Commerce and Community Development (“ACCD”) issued in consultation with the Vermont Department of Health (“VDH”) and the Department of Public Safety/Vermont Emergency Management (“DPS/VEM”).

Addendum 11 builds on Addendum 10, which announced Governor Scott’s plan to reopen Vermont’s economy though a “phased approach.” It also expands mandatory health and safety requirements, and establishes new mandatory training and reporting requirements.

Phase 2: A Gradual Reopening of Certain Sectors of Vermont’s Economy

The business practices authorized in “Phase 1” remain acceptable during “Phase 2.” Beginning Monday, April 27, 2020, unless otherwise stated below, the following business practices are permitted, so long as mandatory health and safety, training, and reporting requirements are observed.

  • Outdoor businesses: Those who work exclusively or largely outdoors (such as civil engineers, site work, exterior construction, skilled trade, public works, energy and utility work, mining, forestry, environmental monitoring, landscaping, painting, tree work, park maintenance, recreational maintenance, and delivery work) may operate with crews of 5 or fewer persons per location/job.
  • Interior construction: Indoor construction may occur in uninhabited structures with 5 or fewer workers at a time, and adhering to social distancing standards.
  • Manufacturing and distribution: Manufacturing and distribution operations may resume if (i) they are low-density; (ii) there are 5 or fewer employees per location; and (iii) employees are able to maintain six feet apart at all times. “Any location” is defined as any address, regardless of partitions, separation of workspace, or different function.
  • Outdoor retail: Outdoor retail operations, such as garden centers and greenhouses, may allow in-person shopping if (i) there are 10 or fewer persons – including customers and staff – present at any one time; (ii) there is no more than one customer per 200 square feet; and (iii) the business prevents customer congregation by, for example, having customers wait in their cars until it is permissible for them to shop.
  • Libraries: Libraries may use curbside pick-up in accordance with Department of Libraries’ guidance. All orders must occur on the phone or online. Only the minimum number of employees necessary to support pick-up and delivery services are permitted.
  • Farmers’ markets: Farmers’ markets may reopen with “limited in-person operations” on May 1, 2020, so long as they comply with ACCD guidance, mandatory health and safety requirements, and so long as the applicable municipality approves the reopening. A farmers’ market authorized to reopen must (i) alter business practices to eliminate crowds and reduce contact between vendors and customers by functioning primarily as a food distribution system; (ii) use a “pre-order, local food pick-up model” to the extent possible; (iii) comply with additional Agency of Agriculture and Food Markets’ guidance; (iv) adhere to municipal ordinances, regulations, and permitting requirements; and (v) use only the minimum number of employees necessary to support pick-up and delivery services.

Employees who reside in another State and work in Vermont may travel to Vermont for work provided that: (1) their employer adopts the mandatory health and safety requirements described in Addenda 10 and 11, and the related ACCD guidance; (2) the employer trains all employees, and reports that training to the State, according to the VOSHA requirements; (3) the employer complies with other limitations on the number of workers/type of work that can be done, as outlined in Addenda 10 and 11, and the related ACCD guidance; and (4) the employees commute directly to and from work each day. , Out-of-state construction crews and property management/landscaping crews are not included in this revised guidance. Those employees must continue to self-quarantine for 14 days upon arrival to Vermont.

To the extent possible, businesses must continue to support work from home and telecommuting. Businesses are encouraged to continue strategies, procedures, and practices to maximize their telephone and online presence, telephone and web-based service delivery, orders, and curbside pick-up and delivery.

Mandatory Health and Safety Requirements

All businesses must follow VDH and Centers for Disease Control and Prevention (“CDC”) guidelines. Beginning Friday, April 24, 2020, businesses operating during the state of emergency must:

  • Designate an on-site health officer for each shift. The health officer is responsible for ensuring compliance with the mandatory health and safety requirements. The health officer must have the authority to stop and modify activities to ensure such compliance.
  • Provide and document that all employees complete mandatory training on health and safety requirements provided by the Vermont Occupational Safety and Health Administration (“VOSHA”), or another such program that meets or exceeds the VOSHA standards. This requirement is discussed in greater detail below. It does not apply to healthcare workers, first responders, or others already trained in infection control, personal protection, and universal precautions.
  • To the extent feasible, “pre-screen” or “survey” employees prior to each shift by checking their temperatures and determining whether they have symptoms of respiratory illness (e., fever, cough, and/or shortness of breath).
  • Prevent an employee from attending work if they have come into contact with a COVID-positive employee or other person. The employee must quarantine for 14 days.
  • Post signs at every entrance clearly indicating that no person may enter if they have symptoms of respiratory illness (e., fever, cough, and/or shortness of breath).
  • Provide good air circulation to any indoor workspace where three or more employees are working. The ACCD recommends opening doors and windows to increase air flow, and limiting the number of people occupying a single indoor space.
  • Prevent all employee congregations. All common areas, such as break rooms and cafeterias, must be closed. Bathrooms may remain open.
  • Prevent employees from reporting to work or remaining at work if they are sick or symptomatic (e., with fever, cough, and/or shortness of breath).
  • Require that employees remain at least 6 feet apart from others while on the job, and instruct employees that they should refrain from touching their faces.
  • Require that employees wear non-medical cloth face-coverings over their nose and mouth when in the presence of others. Retail cashiers may forego a cloth face-covering in lieu of a translucent shield or “sneeze guard.”
  • Provide employees with easy and frequent access to soap and water or hand sanitizer during the duration of work.
  • Require employees to wash or sanitize their hands before entering and leaving the job site.
  • Clean and disinfect all workplace common spaces and equipment (including bathrooms, frequently touched surfaces, doors, tools, other equipment, and vehicles) at the beginning, middle, and end of each shift, and prior to transfer from one person to another.
  • Prevent 3 or more people from occupy any one vehicle when conducting work.

Customers, and the public in general, should wear cloth face-coverings when they are interacting with others from outside their households.

Mandatory Training and Reporting Requirements

By May 4, 2020, all employers must provide and document employee training on standard operating procedures developed by VOSHA in consultation with VDH. Employers also must provide employees with a written copy of the VOSHA standards. State inspectors will ensure businesses have the information needed to comply with the training requirements. The VOSHA training (https://labor.vermont.gov/document/protecting-safety-and-health-workers-vosha) and certificate use to report completion of the training (https://labor.vermont.gov/sites/labor/files/doc_library/Certificate%20template_FILLABLE_0.pdf) are now available.

At a minimum, the training program and written procedures must address:

  • The signs and symptoms of COVID-19.
  • An explanation of how COVID-19 is spread.
  • Appropriate social distancing.
  • Personal hygiene practices, including those set forth in Addendum 11 and ACCD guidance.
  • The types, proper use, limitations, location, handling, decontamination, removal, and disposal of personal protective equipment (“PPE”).

An employer may provide a different training program so long as it meets or exceeds VOSHA’s minimum requirements.

Click here to read COVID-19 News and Updates

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Please contact Heather Hammond (hhammond@gravelshea.com) at
Gravel & Shea PC if you have questions or would like assistance.

April 21, 2020: Senate Approves $484 Billion Amendment to the CARES Act, Increasing Funding, Including $370 Billion More for Business Loans

On April 21, the Senate approved another stimulus bill, which, if passed into law, will provide an additional $484 billion in economic aid to combat the novel coronavirus and related economic distress. It would replenish funds for business loans under the Paycheck Protection Program (“PPP”) and the emergency Economic Injury Disaster Loan Program (“EIDL”). The House is expected to pass the bill on Thursday, April 23, and the President has indicated that he will sign it into law.

Of the new funding, $310 billion will replenish the exhausted PPP. In response to concerns that larger banks and larger businesses crowded out smaller enterprises in the first round of PPP lending, $60 billion of the new PPP funding will be reserved for small lenders, including community banks, credit unions, and other smaller and community financial institutions that have less than $10 billion in assets.

The new bill will also inject $10 billion more into the EIDL grants and $50 billion more into EIDL loans. It specifically opens eligibility for EIDL to agricultural enterprises and increases funding for expanded COVID-19 testing, hospitals and healthcare providers, salaries and expenses of the Small Business Administration.

Even the increased funding that is expected to pass into law is unlikely to satisfy all the demand for loans to eligible businesses. Businesses that are interested in PPP or EIDL loans are encouraged to act without delay after the bill approving new funding is signed into law. The backlog of PPP and EIDL loan applications will be processed before any new applications are accepted. Assuming funds remain, new PPP loan applications will then be accepted through eligible financial institutions (see the list of lenders here) and new EIDL applications will likely be available at https://covid19relief.sba.gov/#/.

Click here to read COVID-19 News and Updates

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FOR MORE INFORMATION

For more information about the Paycheck Protection Program or SBA emergency economic injury disaster loans, please contact your attorney at Gravel & Shea PC or any of the following attorneys at the firm:

Chip Mason (cmason@gravelshea.com), Cassandra LaRae-Perez(claraeperez@gravelshea.com), Oliver Goodenough (ogoodenough@gravelshea.com), Keith Roberts (kroberts@gravelshea.com), Pauline Law (plaw@gravelshea.com), or Catherine Burke (cburke@gravelshea.com).

 

 

April 13, 2020: Paycheck Protection and Disaster Loan Programs Run Dry

Lenders, small businesses and their financial and legal advisers have scrambled to keep pace with the almost daily amendments to the Small Business Administration’s Paycheck Protection Program rules first issued on April 1, 2020. New requirements were posted as recently as last Wednesday. Then, Thursday morning, only 13 days after the PPP was launched and very shortly after Congress expanded the SBA Economic Injury Disaster Loan program to include COVID-19-related losses and provide emergency grants of up to $10,000, the SBA reported that the PPP fund was exhausted. The EIDL fund soon followed.

The SBA-backed PPP, desperately needed by small businesses grappling with COVID-19’s squeeze on the nation’s commerce, was drafted with broad eligibility requirements intended to throw open the doors to small businesses previously closed to SBA programs. It did, and businesses raced to their banks to participate. More than 1.6 million PPP applications were approved since the launch, pledging $349 billion in largely forgivable loans to help struggling enterprises. It is likely, however, that the sprint favored the more established businesses that already had relationships with SBA-approved lenders and ready access to legal counsel to help them navigate the complex and rapidly unfolding programs. Without question, those businesses were in need. But smaller concerns unaccustomed to accessing SBA loan programs and without legal and financial advisers in place may not have been nimble enough to benefit from the rescue package.

On Thursday Congressional negotiations to replenish the PPP fund with an additional $250 billion stalled. It is thought that Congress will eventually supply more funding, but nothing is yet certain.

Click here to read COVID-19 News and Updates

April 17, 2020: Governor Scott Announces Initial Plan to Start Reopening Vermont’s Economy

Today Governor Phil Scott issued Addendum 10 to the prior Executive Order, which declared a state of emergency in Vermont because of the COVID-19 pandemic.  Addendum 10 incorporates guidance (https://accd.vermont.gov/news/update-new-work-safe-additions-stay-home-stay-safe-order) from the Agency of Commerce and Community Development (“ACCD”) issued in consultation with the Vermont Department of Health (“VDH”) and the Department of Public Safety/Vermont Emergency Management (“DPS/VEM”).

The Addendum states that Vermont will undertake a “phased approach to reopen the economy, balancing the need to restore and strengthen our overall social and economic wellbeing with the prevention of a resurgence of COVID-19.”  The Addendum and supporting ACCD guidance outline “Phase 1” of a plan to gradually reopen Vermont’s economy.  They also establish mandatory health and safety requirements for businesses operating during the ongoing state of emergency.

Phase 1: A Limited Reopening of Vermont’s Economy

Phase 1 becomes effective on April 20, 2020, and includes:

  • Outdoor businesses and construction operations: Those who work exclusively or largely outdoors (such as civil engineers, site work, exterior construction, skilled trade, public works, energy and utility work, mining, forestry, environmental monitoring, landscaping, painting, tree work, park maintenance and delivery work) may resume operations with “micro-crews” of no more than 2 persons per location/job. Interior construction may occur in unoccupied structures with no more than 2 workers at a time, adhering to social distancing standards.  Supporting operations may resume with the minimum number of employees necessary to support curbside pick-up and delivery services, so long as (i) they adhere to the mandatory health and safety standards outlined below, (ii) all orders are done online or over the phone, and (iii) only the minimum number of employees necessary to support curbside pick-up and delivery may be at any one site, store, or location.
  • Indoor and outdoor retail operations: No in-store transactions are allowed at this time. All transactions must occur online or over the phone.  Retailers may conduct limited operations, such as curbside pick-up, delivery services, and warehouse or distribution operations supporting curbside pick-up and delivery services.  Only the minimum number of employees necessary to support curbside pick-up and delivery services are allowed at any one store, site, or location.
  • Low or No-Contact, Single worker operations: No or low-contact professional services operating with a single worker (such as appraisers, realtors, municipal clerks, attorneys, property managers and pet care operators) may resume operations so long as (i) no more than 2 persons (i.e., the service provider and client) are present at one time, and (ii) they can comply with the mandatory health and safety requirements listed below.
  • Remote work and remote services: All businesses shall, to the extent possible, continue procedures supporting remote work and telecommuting for all workers.  Businesses are encouraged to continue procedures and practices maximizing on-line and telephone presence and service delivery.  Businesses are encouraged to utilize phone and online orders for curb-side pick-up and delivery.
  • Essential businesses: Business operations deemed “essential” may continue to operate under pre-existing guidance with the addition of the mandatory health and safety requirements for all business operations below.

Mandatory Health and Safety Requirements

All businesses operating during the ongoing state of emergency shall implement the following social distancing and health and sanitation measures in accordance with Vermont Department of Health and Centers for Disease Control and Prevention guidelines:

  • Employees shall not report to work or remain at work if they are sick or symptomatic, e., with fever, cough, and/or shortness of breath.
  • Employees must remain at least 6 feet apart from others while on the job.
  • Employees must wear non-medical cloth face-coverings over their nose and mouth when in the presence of others.
  • Retail cashiers may forego a cloth face-covering in lieu of a translucent shield or “sneeze guard.”
  • Employees must have easy and frequent access to soap and water or hand sanitizer during the duration of work.
  • Handwashing or hand sanitization should be required before entering and leaving the job site.
  • All workplace common spaces and equipment (including bathrooms, frequently touched surfaces, doors, tools, other equipment, and vehicles) must be cleaned and disinfected at the beginning, middle, and end of each shift, and prior to transfer from one person to another.
  • No more than 2 people shall occupy one vehicle when conducting work.

Customers, and the public in general, should wear cloth face-coverings when they are interacting with others from outside their households.

Click here to read COVID-19 News and Updates

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Please contact Heather Hammond (hhammond@gravelshea.com) at Gravel & Shea PC if you have questions or would like assistance.

 

 

 

 

April 14, 2020: Paycheck Protection Program Open to Additional Businesses with More Than 500 Employees and Other Loan Program Clarifications

The following bulletin updates the guidance Gravel & Shea PC issued on March 27, following the passage of the CARES Act.  The Small Business Administration (the “SBA”) and the Department of the Treasury recently released answers to frequently asked questions about the new Paycheck Protection Program (the “PPP”).  The responses clarify a variety of issues, including which businesses qualify for PPP loans, what counts as employee compensation for calculating payroll, what lenders must do to verify existing bank customers’ application information, and when the loan forgiveness period for each loan runs.

Initial program rules seemed to limit PPP loans to “small business concerns”; businesses, tribal businesses, or 501(c)(3) or 501(c)(19) nonprofits with 500 or fewer employees; or those with the maximum number of employees and revenue specified in the SBA size guide (available here).  However, the FAQs reveal that some other businesses also qualify for PPP loans.  Businesses that (1) have a maximum tangible net worth of $15 million or less and (2) which have average net income after federal income taxes (excluding carry-over losses) of less than $5 million for each of the last two full fiscal years also qualify as small businesses for purposes of the PPP.

The FAQs also clarify which payments employers should include in and exclude from their payroll costs calculation.  Employers should count only the first $100,000 of each employee’s cash compensation (salaries, wages and tips), but should also include employer contributions to retirement plans, group health insurance premiums, other employee benefits, and employers’ state and local payroll tax obligations without regard to the $100,000 cap.  Employers should exclude federal income taxes and FICA deductions from payroll calculations.  Businesses’ payroll costs do not include costs paid to independent contractors (but sole proprietors or independent contractors who meet the PPP criteria may take out their own loans).

If a PPP applicant that submits an application through its existing lender experiences delays due to the lender verifying know your customer (“KYC”) information, the applicant should refer the lender to the FAQs.  The FAQs state that lenders “do not need to re-verify the information” on beneficial ownership of a loan account if the loan is made to an existing customer for whom that information was previously verified.

Finally, the FAQs confirm that the eight-week period used for evaluating forgivable loan expenditures begins on the date when the lender first disburses PPP funds to a borrower.  Lenders must fully disburse loans within ten calendar days of approving a PPP loan, so borrowers should be prepared to spend all loan proceeds they want forgiven within no more than 9.5 weeks of their loan approval date.  The ten-day disbursal rule may change if the Treasury Department responds to a bipartisan effort to loosen that deadline.

For additional details on the PPP, which provides two-year, 1% interest loans of up to 2.5 times monthly payroll costs (up to $10 million) to small businesses and sole proprietors experiencing economic distress as a result of the coronavirus pandemic, visit https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf.  Contact an SBA-approved lender or your attorney for questions about whether your business qualifies.

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FOR MORE INFORMATION

For more information about SBA emergency economic injury disaster loans, please contact your attorney at Gravel & Shea PC or any of the following attorneys at the firm:

Chip Mason (cmason@gravelshea.com), Cassandra LaRae-Perez (claraeperez@gravelshea.com),  Oliver Goodenough (ogoodenough@gravelshea.com), Keith Roberts (kroberts@gravelshea.com), Pauline Law (plaw@gravelshea.com), or Catherine Burke (cburke@gravelshea.com)

April 14, 2020: Update on SBA Emergency Economic Injury Disaster Loans

A version of this bulletin was originally posted on March 23, but this April 14, 2020 update includes new information.

The Small Business Association (“SBA”) launched its application portal for coronavirus-related emergency economic injury disaster loans in late March.  Loans are available to U.S. small businesses and sole proprietors, small agricultural cooperatives, small tribal businesses, small ESOPs, and small nonprofit organizations.  Applicants can find and complete the application at https://covid19relief.sba.gov/#/.

Applicants may apply for emergency economic injury disaster loans, which may be used to pay ordinary and necessary operating expenses, including payroll, supply chain costs, COVID-19-related sick leave, rent and mortgage payments, and existing debt no longer covered by business revenue.  The program permits borrowers to obtain up to $2 million in loan funds, though industry and media analysts report that the SBA is drastically reducing loan amounts to keep pace with high demand.  Interested businesses and sole proprietors are encouraged to apply as soon as possible to ensure that funds are still available when their applications are processed.

Disaster loan interest rates are fixed at 3.75% for small businesses and 2.75% for non-profits.  Loans may be payable for a term of up to 30 years, depending upon a borrower’s ability to pay.  The SBA has automatically deferred all repayment of coronavirus disaster loans for one year, and interest deferment may be available for up to four years.  Borrowers can fold emergency economic injury disaster loans into forgivable loans made under the Paycheck Protection Program (“PPP”) if they meet certain requirements, but because emergency advances are automatically forgiven, they are excluded from the forgivable amount of PPP loans.

Eligibility:

To be eligible for a disaster loan, an applicant must be experiencing financial hardship related to the coronavirus pandemic, and must meet the SBA’s revenue or headcount size standards.  Generally, this means that the applicant must employ 500 or fewer employees, but exact size limits vary by industry.  Click here to review the SBA Small Business Size Standards.  An applicant also must have been in business since at least since January 31, 2020 to qualify for a disaster loan (which is much shorter than the SBA’s typical one-year pre-disaster requirement).

Businesses in need of immediate cash may request an emergency advance, which does not need to be repaid even if the loan request is later denied.  The CARES Act permits advances of up to $10,000 and requires that advances be disbursed within three days of application.  In practice, however, actual disbursal is taking longer in most cases and the SBA has implemented a cap on the advance amounts, limiting them to $1,000 per employee of the applicant business.  The effect of the reduced advances on sole proprietors is not known.

How to Apply:

Complete the emergency economic injury disaster loan application at https://covid19relief.sba.gov/#/.  Be aware that when you submit an application through this portal, you will not receive an e-mail confirmation, but you will receive an application number on the final screen of the application, which you should either write down, screenshot, or print for your records.  The SBA should e-mail you when it starts processing your loan application.

To apply for a disaster loan, an applicant must submit:  (1) a completed and signed Business Loan Application or Sole Proprietor Loan Application; and (2) an Economic Injury Disaster Loan Supporting Information Form.  Applicants are not required to submit copies of their tax returns, but they must self-certify as to the accuracy of their applications, under penalty of perjury.

Timeframe for Approvals; Deadlines

The SBA currently expects to review and process all loan applications within 2-3 weeks.  Due to strong demand, however, applicants may reasonably expect that these timeframes will be extended.

The current application deadline for emergency economic injury disaster loans is December 31, 2020.  This deadline may be subject to change, particularly if the program exhausts available funds sooner.

Click here to read COVID-19 News and Updates

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FOR MORE INFORMATION

For more information about SBA emergency economic injury disaster loans, please contact your attorney at Gravel & Shea PC or any of the following attorneys at the firm:

Chip Mason (cmason@gravelshea.com), Cassandra LaRae-Perez (claraeperez@gravelshea.com),  Oliver Goodenough (ogoodenough@gravelshea.com), Keith Roberts (kroberts@gravelshea.com), Pauline Law (plaw@gravelshea.com), or Catherine Burke (cburke@gravelshea.com).

 

 

April 14, 2020: The United States Department of Labor Issues Additional Guidance for Employers and States on COVID-19 Response Measures

The Guidance Relaxes OSHA Recordkeeping Requirements for Many Employers

The U.S. Department of Labor issued interim enforcement guidance for Occupational Safety and Health Administration (“OSHA”) recordkeeping requirements as they relate to cases of COVID-19.

Because COVID-19 is considered a “recordable illness” under OSHA rules, employers are responsible for recording cases of COVID-19 when an employee has a confirmed case of COVID-19 that is (i) work-related and that (ii) involves one or more recording criteria, including, but not limited to, days away from work and medical treatment beyond first aid.

Employers in healthcare, emergency medical, firefighting, law enforcement, and correctional industries must follow those general reporting requirements.  However, because it is often difficult for other employers to determine whether the transmission of a particular COVID-19 case was “work-related,” OSHA is exempting most employers from COVID-19 recordkeeping requirements unless (1) there is objective evidence the COVID-19 case may be work related, and (2) that evidence was reasonably available to the employer.

These recordkeeping requirements and exceptions took effect on April 10, 2020, and will remain in effect until further notice from the U.S. Department of Labor.

U.S. Department of Labor Clarifies the Pandemic Emergency Unemployment Compensation Program

The U.S. Department of Labor’s Employment and Training Administration issued guidance to State Departments of labor about the federally funded Pandemic Emergency Unemployment Program (“PEUC”), which was recently authorized by Congress in the CARES Act.

Under the PEUC, states will provide up to 13 weeks of federally funded benefits to qualifying individuals who:

  • have exhausted all rights to regular compensation under state or Federal law with respect to an unemployment benefit year that ended on or after July 1, 2019;
  • have no rights to regular compensation with respect to a week under any other state or federal unemployment compensation law, or to compensation under any other federal law;
  • are not receiving compensation with respect to a week under the unemployment compensation laws of Canada; and
  • are able to work, available to work, and actively seeking work; although states must offer flexibility on “actively seeking work” where there are COVID-19 impacts and constraints.

The PEUC unemployment benefits are fully funded by the federal government, meaning states may not seek contributions from employers.

Click here to read COVID-19 News and Updates

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Please contact Heather Hammond (hhammond@gravelshea.com) at Gravel & Shea PC if you have questions or would like assistance.

 

 

April 10, 2020: Main Street Lending Program: New Federally-Backed Loans and Loan Expansions for Small and Medium-Sized Businesses

On April 9, the Federal Reserve announced details on the Main Street Lending Program (the “Program”), a new loan program authorized under the CARES Act to assist small and medium-sized businesses with financial needs due to the coronavirus/COVID-19 pandemic.  Under the Program, eligible borrowers can receive new loans or loan expansions of $1 million or more by September 30, 2020.  The Federal Reserve is making up to $600 billion available under the Program.

Small businesses may participate in the Program, provided they take out a loan or loan extension that meets the $1 million minimum loan size.  Companies that received or applied for loans under the Paycheck Protection Program (“PPP”) are also eligible for loans under the Main Street Lending Program.

The Main Street Lending Program is still being finalized.  The Federal Reserve is accepting comments on the program until Thursday, April 16.  Interested borrowers and lenders are encouraged to submit comments here.

Eligible Borrowers:

Eligible businesses are those with up to 10,000 employees or up to $2.5 billion in 2019 annual revenue that were “in good financial standing before the crisis”, that were created or organized under U.S. law, and that have a significant portion of their operations and a majority of their workforce based in the U.S.  No criteria for determining a business’s good financial standing prior to the COVID-19 crisis are specified in the preliminary guidance on the Program.

Eligible borrowers may receive either a new loan or a loan expansion under the Program, but not both.  Receipt of a PPP loan does not disqualify a business from the Program though.

To receive new or expanded loans under the Program, borrowers must also certify:

  • that the loan or loan expansion will not be used to:
    • repay or refinance pre-existing loans or lines of credit the borrower received from the same lender, which, for the expanded loan, applies to the amount of the loan prior to its expansion under the Program;
    • repay other loan balances or repay debt of equal or lower priority before fully repaying the Program loan or loan expansion (except that the borrower may make mandatory principal payments on other loans);
  • that they:
    • will neither seek to nor actually cancel or reduce any other existing lines of credit;
    • need financing due to the coronavirus pandemic;
    • will use the new or expanded loan to maintain payroll and retain employees during the term of the loan or loan expansion (no specific standards on the required level of payroll or employee retention are included in the initial guidance)
    • meet the EBITDA leverage requirements set by the Program (which are that, in combination with the borrower’s existing outstanding and committed but undrawn debt, a loan does not exceed 4x the borrower’s 2019 EBITDA and a loan extension does not exceed 6x the borrower’s 2019 EBITDA)
    • will abide by the compensation, stock repurchase and capital distribution limits set by Section 4003(c)(3)(A)(ii) of the CARES Act, which include:
      • not repurchasing the borrower’s stock or its parent’s stock or paying any dividends or capital distributions on its stock during the term of the loan and for 12 months after its full repayment; and
      • capping total compensation of employees and officers who earned over $425,000 in 2019 but whose salaries were not set by collective bargaining agreement to their 2019 compensation amount or to twice that amount in severance; and
      • capping total compensation of all employees and officers who earned over $3 million in 2019 to $3 million plus 50% of the amount by which their 2019 compensation exceeded $3 million.
    • that no more than 20% of the borrower is directly or indirectly owned by the President, Vice President, the leader of a department of the Executive branch of the federal government, a Member of Congress, or the spouse, child, son-in-law or daughter-in-law of any of those individuals.

Loan Terms and Fees:

The following features apply to both new and expanded loans under the Program:

  • 4-year loan maturity
  • One year deferral of principal and amortization
  • Term loans only
  • Adjustable rate of SOFR + 205-400 basis points
  • Minimum loan of $1 million
  • No prepayment penalty
  • At least according to initial program guidance, no loan forgiveness is available

Some features of the new and expanded loans differ though, such as the permitted loan origination dates, maximum loan sizes and loan fees.  The divergent features are explained below.

New Loans

  • Maximum loan size: lower of $25 million or whatever amount that, when added to existing outstanding and committed but undrawn debt, does not exceed 4x the borrower’s 2019 EBITDA
  • Loan fees:
    • the borrower pays a loan origination fee of 100 basis points of the principal amount
    • the lender may also require the borrower to reimburse it for an additional 100 basis point facility fee that the Federal Reserve charges the lender
    • the Federal Reserve pays 25 basis points of the principal amount as an annual loan servicing fee
  • Loans are unsecured
  • Loans can be made from April 8, 2020 to September 30, 2020

Expanded Loans

  • Maximum loan size: lower of $150 million; 30% of the borrower’s existing outstanding and committed but undrawn bank debt; or whatever amount that, when added to the existing outstanding and committed but undrawn debt, does not exceed 6x the borrower’s 2019 EBITDA
  • Loan must have been originated before April 8, 2020, but expanded on a date between April 8, 2020 to September 30, 2020 (inclusive)
  • Loan fees:
    • the borrower pays 100 basis points of the principal of the loan extension (not of the full loan)
    • the Federal Reserve pays 25 basis points of the principal of the loan extension as an annual loan servicing fee

Eligible Lenders:

Many, but not all, U.S. financial facilities qualify as lenders under the Program.  U.S. insured depository institutions, U.S. bank holding companies, and U.S. savings and loan holding companies are all eligible lenders.  Credit unions are not eligible lenders under the Program.  Eligible Lenders will retain a five percent (5%) share of all loans originated or expanded under the Program, and the remaining 95% will be purchased by the Federal Reserve under the Program.

Interested businesses are encouraged to monitor the Federal Reserve website (https://www.federalreserve.gov/) for new details on the Main Street Lending Program, particularly after the comment period closes on April 16, and to consult with their banks, financial advisors, and attorneys to determine if they qualify.  Current term sheets are also available online for the Main Street New Loan Facility and the Main Street Expanded Loan Facility.

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FOR MORE INFORMATION

For more information about the Main Street Lending Program, please contact your attorney at Gravel & Shea PC or any of the following attorneys at Gravel & Shea PC:

Peter Erly at perly@gravelshea.com; Chip Mason at cmason@gravelshea.com; Cassandra LaRae-Perez at claraeperez@gravelshea.com; Oliver Goodenough at ogoodenough@gravelshea.com; Keith Roberts at kroberts@gravelshea.com; Pauline Law at plaw@gravelshea.com; or Catherine Burke at cburke@gravelshea.com.

April 7, 2020: Agency of Natural Resources Issues Enforcement and Compliance Guidance

On Tuesday, April 7, The Vermont Agency of Natural Resources (“ANR”) issued a new Enforcement and Compliance Guidance document pertaining to the regulated community (the “ANR Guidance”).

Generally, the ANR Guidance encourages Permittees and the general public to adhere to the Governor’s stay at home order.  Specific to the regulated community, the ANR Guidance directs that ANR may exercise enforcement discretion over Permittees whose activities were not designated critical to public health and safety by the Governor in Addendum 6 to Executive Order 01-20 throughout the remainder of the COVID-19 State of Emergency.

For further Discussion on Addendum 6, and a listing of critical activities, please refer to Gravel & Shea COVID-19 update “What does Vermont’s Stay Home/Stay Safe Order Mean for Vermont Businesses?” dated March 25 and available at: https://www.gravelshea.com/2020/03/what-does-vermonts-stay-home-stay-safe-order-mean-for-vermont-businesses/

Under the ANR Guidance, to the extent that a non-critical Permittee’s cessation of operations results in permit noncompliance, the ANR may exercise enforcement discretion provided the non-compliant Permittee adheres to each of the following requirements:

  • Maintain documentation showing that the noncompliance is attributable to COVID-19 pandemic (including that those personnel shortages during the pandemic due to illness, contractors or laboratories not operating due to not being designated as critical under the Governor executive order 01-20);
  • Ensure that the noncompliance does not present a significant threat to human health or the environment;
  • Take all reasonable steps to prevent and/or mitigate the noncompliance;
  • Notify the Agency of the noncompliance as soon as possible following an incident; and
  • Comes into compliance as soon as possible, or enters into a schedule to return to compliance with the Agency.

Important for all Permittees to note, the ANR Guidance expires when the Governor ends the State of Emergency, and does not apply to activities regulated by the Department of Fish and Wildlife or criminal permit violations.  Additionally, the ANR Guidance does not excuse a Permittee’s responsibility to prevent, respond to, or report accidental releases of petroleum products or hazardous materials as required by Vermont law.

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