The House Select Subcommittee on the Coronavirus Crisis recently announced an investigation into the role of four Fintech companies and partner banks in issuing allegedly fraudulent Paycheck Protection Program (PPP) loans.  The Subcommittee’s press release references certain reports that the Fintech industry and its bank partners “have been linked to a disproportionate number of fraudulent PPP loans . . . raising questions about whether FinTechs and their bank partners have adequately screened PPP loan applications for fraud.”  This announcement builds on the Subcommittee’s March 25 findings that the Treasury Department and SBA failed to institute adequate safeguards to prevent waste, fraud, and abuse in pandemic relief programs, leading to nearly $84 billion in potentially fraudulent loans. …
Continue Reading House Subcommittee Launches Investigation into FinTech Companies’ Role in Allegedly Fraudulent PPP Loans

On April 29, 2021 Governor Newsom signed California A.B. 80, largely conforming to Federal rules relating to deductibility of expenses paid with funds from forgiven Paycheck Protection Program (PPP) loans.  The $150,000 limitation in prior versions of A.B. 80 was removed, and replaced with a requirement that only non-publicly traded companies who reported losses of at least 25% in gross receipts during one quarter of 2020 can deduct such expenses.  That 25% decrease in gross receipts was also a condition for receiving a PPP loan in the second round of loans made available in late 2020.  Publicly traded companies cannot deduct any amount of expenses paid with funds from forgiven PPP loans.
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Continue Reading California Largely (But Not Fully) Conforms to Deductibility of Expenses Paid with Forgiven PPP Loans

OK, so you’re a sophisticated lending attorney in Metropolis who is comfortable with everything from aircraft financing to syndicated loans secured by casinos in Macau. Yet you feel a twinge of uncertainty when a business loan is to be secured by wine inventory made from grapes grown in both California and Washington. You know intuitively that anytime farmers, ranchers or food processors are in the mix, either as a borrower or a supplier to the borrower, the underwriting and documentation challenges are not uniform on a state-by-state basis, and are compounded by an overlay of federal laws designed to protect growers of perishable crops and providers of livestock. To get a reality check, you sometimes will secretly call your law school classmate who oddly returned to Smallville and now represents its one bank.
Continue Reading Farm Lending Pitfalls For Urban Lawyers

The 2021 increase to California’s homestead exemption to up to $600,000 stands to change the legal and economic relationship of guarantors with their lenders and vendors who make loans or sell goods or services on credit.  Before examining this important change in California’s homestead exemption and its effect on guaranties, some perspective is needed on guaranties themselves.
Continue Reading It’s Time to (Carefully) Secure that Guaranty

On January 19, 2021, the U.S. Small Business Administration (SBA) published its 28th Interim Final Rule (Forgiveness IFR) covering the loan forgiveness requirements and review procedures for the Paycheck Protection Program, as reauthorized and amended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the Economic Aid Act), and 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 Economic Aid 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 U.S. Department of Treasury (the CARES Act)).
Continue Reading New Interim Final Rules Re: PPP Loan Forgiveness Requirements and Review Procedures as Amended by Economic Aid Act

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)