Government Stimulus for the Family Lawyer – CARES ACT – Paycheck Protection Program (PPP)

By Jeremy Browner 

The COVID-19 Pandemic has changed the ability of the family law attorney to generate revenue. Stay at Home Orders and court closures have severely reduced the ability to help our clients navigate through their personal choices and North Carolina family law. In addition, our clients may be going through employment issues and have suffered a loss of income as well.

There are a number of federal legislative changes and executive orders from North Carolina Governor that may help. However, in this blog entry, I will discuss the Paycheck Protection Program.

The Paycheck Protection Program springs forth as a creation of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), HR 748, PL 116-136, which was signed by President Trump on March 27, 2020. Title I of the CARES Act establishes, among other things, the Paycheck Protection Program (the “PPP”) providing for up to $349,000,000,000 in forgivable loans to business concerns which are backed by the United States Small Business Administration (the “SBA”). The PPP is a short-term program for the “Covered Period” from February 15, 2020 until June 30, 2020 and loans are capped at the lesser of 2.5x a borrower’s LTM average monthly payroll or $10,000,000 per borrower.

The PPP interim final rule was pre-published for publication in the federal register during the evening hours of Thursday, April 2, 2020. The US Treasury Department has created three information sheets, an Overview, a sheet for lenders, and a sheet for borrowers. In addition, they published the application for PPP and a Lender Electronic Data Form.

See FAQ below:

When can I apply?

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

Where can I apply?

Through a bank with whom you already have a banking relationship, assuming that they are a SBA lender, or visit www.sba.gov for a list of SBA lenders

Who can apply?

All businesses–including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors–with 500 or fewer employees can apply. (That includes all family law attorneys and their firms!)

What can I use these loans for?

You should use the proceeds from these loans on your:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

What counts as payroll costs?

Payroll costs include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

How much of my loan will be forgiven?

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

What is my interest rate?

1.00% fixed rate.

When is my loan due?

In 2 years.

Where can I find summaries of PPP and CARES Act?

If you want a more detailed summary of PPP: Link

If you want a more detailed summary of CARES Act: Link

What if I have more questions?

If you have any questions about this program please contact me at jb@brownerlaw.com

Jeremy Todd Browner, Esq., Browner Law, PLLC
Hillsborough, Orange County, North Carolina