On January 6, 2020, the SBA published its 26th Interim Final Rule (the First Draw PPP IFR) and 27th Interim Final Rule (the Second Draw PPP IFR)[1] with respect to the Paycheck Protection Program (PPP), as reauthorized and modified under Title III (cited as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act)) of Division N of the Consolidated Appropriations Act, 2021.  The PPP was originally enacted under the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or otherwise modified from time to time prior to the enactment of the Economic Aid Act, including by the Paycheck Protection Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act, applicable federal regulations and interpretive guidance issued by the SBA and Treasury, the CARES Act).
Continue Reading Paycheck Protection Program: SBA Issues Guidance on First Draw and Second Draw PPP Loans and Releases PPP Applications Pursuant to the Economic Aid Act

This client alert is the second of a two part series concerning the Save Our Stages Act (the “SOS Act”), which became law on December 27, 2020 as Section 324 of the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act (the “Economic Aid Act”, comprising Title III of Division N of the Consolidated Appropriations Act, 2021).  The SOS Act establishes a new grant program (the “SOS Program”, also known as the “grant program for shuttered venue operators”) to be administered by the Small Business Administration (“SBA”) to aid certain financially distressed venue operators, event promoters or producers, and talent representatives.
Continue Reading The Save Our Stages Act – Time for Eligible Businesses to Get Ready for Their Audition (Part 2 of 2)

Among the various bills that were amalgamated in the Consolidated Appropriations Act, 2021 (the omnibus appropriations and stimulus funding bill that was signed into law on December 27, 2020) was a modified version of the Save Our Stages Act (the “SOS Act”), a bill first introduced into the Senate by Sen. John Cornyn (TX) on July 22, 2020. The SOS Act can be found in Section 324 of the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act, which act comprises Title III of Division N of the Consolidated Appropriations Act, 2021.  The SOS Act establishes a new grant program (the “SOS Program”, also known as the “grant program for shuttered venue operators”) to be administered by the Small Business Administration (“SBA”) to aid certain financially distressed venue operators, event promoters or producers, and talent representatives.
Continue Reading The Save Our Stages Act – Time for Eligible Businesses to Get Ready for Their Audition (Part 1 of 2)

[Update: This article has been updated since its initial publication on December 31, 2020.]

On December 27, 2020, President Donald Trump signed into law the Consolidated Appropriations Act, 2021 (the 2021 Consolidated Appropriations Act), an omnibus statute that is comprised of, among other laws, twelve fiscal year 2021 appropriations bills for the federal government and an economic aid package to assist business concerns that continue to face hardships due to the COIVD-19 pandemic.  Title III of the 2021 Consolidated Appropriations Act, which is cited as the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Act), among other matters, reauthorizes and modifies the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan program (EIDL), as enacted under the Coronavirus Aid, Relief, and Economic Security Act (as amended, supplemented or otherwise modified from time to time prior to the enactment of the Act, including the Paycheck Protection Program and Health Care Enhancement Act, the Paycheck Protection Program Flexibility Act, applicable federal regulations and interpretive guidance issued by the SBA and Treasury (the CARES Act)).
Continue Reading UPDATED: The Reauthorization and Revival of the Paycheck Protection Program and Economic Injury Disaster Loan Program under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act

As reported in our earlier blog post The CARES ACT – Tax Relief, the federal CARES Act provides for forgiveness of indebtedness for eligible recipients of Paycheck Protection Program (“PPP”) loans in an amount equal to the sum of the recipient’s payroll costs, interest on mortgage obligations, rent obligations and utility payments (subject to certain conditions and limitations).  Under federal law, any amount of covered loans forgiven under the CARES Act is excluded from gross income for federal income tax purposes.
Continue Reading California Conforms To Federal Income Tax Treatment Of PPP Loan Forgiveness

On October 2, 2020, the U.S. Small Business Administration (SBA) released a Procedural Notice providing guidance addressed to Paycheck Protection Program (PPP) lenders and SBA employees as to the circumstances under which prior SBA approval is required before a borrower of a PPP loan undergoes a change of ownership.[1]  In particular, the October 2, 2020 Procedural Notice includes instructions to PPP lenders on how they may address equity or asset M&A transactions, ownership restructurings, or transfers of ownership interests involving their PPP borrowers.  Importantly, the October 2, 2020 Procedural Notice does not clearly address the circumstance of a change of ownership of a PPP borrower resulting from the issuance of additional ownership interests in the PPP borrower.[2]
Continue Reading The October 2, 2020 SBA Procedural Notice: Change of Ownership Transactions Involving PPP Borrowers

On August 31, both houses of the California legislature passed and sent to Governor Newsom for signature the California Consumer Financial Protection Law (the CCFPL).  Effective on January 1, 2021 if Governor Newsom signs the bill (which he is expected to do), the Department of Business Oversight will be replaced by the Department of Financial Protection and Innovation (DFPI).  Much of the law comes directly from Title X of the Dodd-Frank Act, with a particular focus on consumer protection.  While the DBO has authority to enforce specific laws, the focus of the DFPI will be on the kinds of products and services that are offered, without linking the agency’s authority to particular statutes.
Continue Reading California Legislature Passes Mini-CFPB Bill; If You Liked The Department Of Business Oversight, Get Ready For The Department Of Financial Protection And Innovation

This post originally appeared as an article in the July/August 2020 issue of the Journal of Corporate Renewal (JCR), the official publication of the Turnaround Management Association (TMA).

The ability of companies to continue as going concerns has become more challenging than ever. As companies pivot and move forward with product production
and sales, they must consider not only their financial viability but the financial viability of their customers, suppliers, and licensors.
Continue Reading Protecting Exclusive Distribution Rights for Patented Products and Other Licensed IP

On July 15, 2020, the Federal Reserve Bank of Boston issued new guidance expressly permitting tribal businesses that are borrowers under the Main Street Lending Program (“MSLP”) to pay dividends to their tribal government owners.  In its amended Frequently Asked Questions (the “July 15th FAQs”), available here, the Federal Reserve announced that the Treasury Secretary exercised his authority under the CARES Act to waive the prohibition against the payment of dividends in the MSLP, permitting tribal businesses that are wholly or majority-owned by one or more tribal governments to make distributions to their tribal government owners.  See July 15th FAQ H.15 and H.2.  Tribal businesses and organizations seeking financial relief and Lenders seeking to extend credit under the MSLP have advocated for this important clarification so that tribal businesses may gain access to much-needed capital during the economic strain of the COVID-19 pandemic.  For example, Sheppard Mullin sought this important clarification with respect to tribal distributions in comments it submitted to the Federal Reserve on April 16, 2020.
Continue Reading Federal Reserve Clarifies that Distributions to Tribal Governments are Permitted Under the Main Street Lending Program

The U.S. Supreme Court in a 5-4 decision on July 9, 2020 held that the State of Oklahoma lacked jurisdiction to prosecute an enrolled member of the Seminole Tribe of Oklahoma because the crimes he was accused of committing occurred within the Muscogee (Creek) Reservation.
Continue Reading U.S. Supreme Court finds Muscogee (Creek) Nation’s Reservation Remains Intact For Purposes of Criminal Jurisdiction

Below please find a link to a newly-updated version of the Sheppard, Mullin, Richter & Hampton LLP (Sheppard Mullin) Paycheck Protection Program (PPP) Loan Forgiveness Estimator Workbook (the Workbook), which was created by and is the property of Sheppard Mullin.
Continue Reading Paycheck Protection Program: Updated Loan Forgiveness Estimator Workbook