An Attorney Can Help Your Company Comply With PPP Loan Requirements

An Attorney Can Help Your Company Comply With PPP Loan Requirements
business law

The Paycheck Protection Program (PPP) was created in response to the business closures caused by the coronavirus pandemic. Part of the CARES Act, the PPP authorized $349 billion to small businesses to help employees affected by the crisis. With that much money being lent, as well as possible loan forgiveness, the government wants to ensure borrowers are complying. To that end, a massive government compliance team is being assembled to audit businesses. If your company participated in PPP, you may be subject to an audit. A Connecticut business law attorney can help ensure you comply with the program’s rules.

PPP borrower companies must certify that they are in need of funds due to economic uncertainty caused by coronavirus. After funds were disbursed, criticism arose that large companies who didn’t need the money as badly were borrowing it. The Small Business Administration (SBA), which is in charge of the loans, later issued clarification on the rules. PPP loans are not intended for businesses with adequate sources of liquidity that can support their ongoing operations.

A Safe Harbor Provision that allowed borrowers to return PPP loans without penalty has expired. If you borrowed $2 million or more, your company will be fully audited. Smaller loans may also be subjected to audits. These audits are designed to ensure that the loan funds were properly used. The SBA also wants to make sure that any company that borrowed under PPP really needed it. If you’re facing an audit, or want to make sure your business complies, an experienced Connecticut business attorney can help.

On May 15, 2020, the SBA announced its long awaited loan forgiveness rules. Here are a few of the basics:

  • A borrower must submit a PPP Loan Forgiveness Application along with supporting paperwork. The paperwork mainly concerns employee compensation that was made during the eligible time period.
  • The borrower has to make several certifications regarding the use of the money. You should understand these certifications and the penalties for misusing the PPP loan funds.
  • You should gather payroll records to show employee hours worked and salaries earned. Other records related to the operation of the business should also be gathered, since loans may cover other expenses.

It’s important to point out that a loan, or part of a loan, may not be forgiven in some circumstances. For example, if the borrower reduced the salary of certain workers or its staff size. These and other loan forgiveness rules are complicated, and it’s best to turn to someone who is familiar with them. Our law firm has tracked the SBA loan forgiveness rules, and we can help your business qualify.

As with many government loan programs, the PPP comes with strings attached. These are some issues that can cause legal problems for borrowers or jeopardize loan forgiveness eligibility:

  • Misusing the funds (PPP loans are generally for company payroll, rent, mortgage interest, and utilities)
  • Layoffs, furloughs, and staff size and pay reductions
  • Failure to follow loan forgiveness rules or required steps
  • Failure to document your payroll and other eligible expenses
  • The complex and constantly evolving PPP loan rules and regulations

YOU’VE GOT A BUSINESS TO RUN – LET US HELP WITH THE LEGAL ISSUES

At Aeton Law Partners, we want your business to be successful. That’s especially true when it comes to complying with requirements involving PPP loans. The fact is, you have a business to run. And it can be difficult to do so while staying on top of the government’s complicated rules. Let us help your business handle the legal side of things. If you have questions or concerns about complying with PPP or SBA regulations, give us a call. We can schedule a consultation for you today.

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