Category: Stanley

Bankers and SBA staffers may soon have that hangover, of their own making. I am speaking, of course, about the Paycheck Protection Program debt hangover – 11.7 million loans created to be forgiven. Everyone knows that forgiveness is hard – hard to request, and, often, even harder to grant – especially when big money is involved. But who could have imagined the challenges of walking away from $400 billion in bank debt?

(Actually, the total amount began as $800 billion, before loans already wiped off the books.)

To try to chip away at that mountain of, literally, debt, the Small Business Administration recently created its “direct forgiveness” portal (https://dfussbaforgiveness.zendesk.com/hc/en-us), for loans under $150,000.00 – over 90% of all PPP loans. That sheer volume has, reportedly, delayed completion of bank forgiveness approvals – 11.7 million separate applications must be filed, reviewed and processed.

To try to break the backlog, the Small Business Administration recently created a new portal (open on August 4, 2021) for “direct” forgiveness by the SBA, rather than by the bank lender. To avoid the appearance of cutting into lender/borrower relationships, the SBA quickly clarified that it will not take “over the forgiveness decision responsibility from the lender.”

Instead, according to the SBA, “Lenders retain responsibility for making the loan forgiveness decision. SBA is simply providing a proven, user-friendly platform on which borrowers may submit their forgiveness applications and lenders will submit their forgiveness decisions to SBA.”

If so, why go to the expense of reinventing the loan forgiveness wheel – and adding a new step to what has been a convoluted process?

Lenders must also choose to “opt in” to the portal, presumably to avoid the cost of creating their own review process – a procedure lenders already do every day, for all loans. Veterans of the PPP scramble in 2020 may also question the characterization of the SBA software as “proven.” Moreover, many lenders may have already incurred costs to build their own forgiveness software. In fact, the 60-day deadline for lenders to process forgiveness applications, and constantly changing program rules (including predictions of expedited procedures), may even have led some lenders to delay the start of processing of their own forgiveness applications.

Why incur unrecoverable costs today, that may be avoidable tomorrow, under the next attempt at simplification? Whatever the reason, many lenders have already declined to participate in the SBA’s direct forgiveness procedure, in favor of their own portals. From a lender perspective, direct forgiveness also eliminates a major incentive to participate in the PPP program – new customer relationships. A bank can’t promote its fee-based services if the customer deals only with the SBA, rather than with a bank relationship officer. Keeping the forgiveness process “in-house,” in contrast, preserves that relationship-building opportunity, in the context of a success experience for the PPP borrower (loan forgiveness).

Lenders must also monitor the new SBA portal for information about the loan status. Without affirmative SBA reporting of loan status, however, bank auditors and compliance officers must regularly check the forgiveness portal before issuing routine financial statements or reports – a lender headache, especially for smaller PPP loans with little or no margin to recover monitoring and forgiveness expenses. If those loans were marginally profitable before this direct forgiveness program, how much more so will they be with these additional expenses? Regardless whose software is used, of course it will work, seamlessly – doesn’t all software perform as intended, out of the box? Perhaps the banks that have “opted out” of the SBA portal don’t want to risk their reputation with borrowers on the quality of the SBA’s new software code (or the SBA’s “real time” quality control of it).

SBA Associate Administrator Patrick Kelley well stated what may be bank lenders’ frustration:

Give it over to the government and get your life back. All of us want to be done with forgiveness — borrowers, lenders, government — by the fall, across the board. So this is the final push that will hopefully put PPP in the rearview mirror for the borrowers, for the lenders and for the agency.

Will we soon have to do it all over again, if a portal is created for larger PPP loans? Or for the required lender verification of borrower revenue loss eligibility for Second Draw PPP loans? To continue the “hangover” metaphor, perhaps the new portal is just the proverbial “hair of the dog” – let’s just get the PPP loans off society’s books, and let banks return to “real” loans.

To discuss this or other issues involving the Paycheck Protection Program, please contact Stanley P. Jaskiewicz or the SGRV Corporate Group at 215-241-8866.

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Despite our progress on reducing infections and deaths from COVID-19, we still seem stuck with one aspect of the Pandemic: ever changing rules. (I wrote about 2020’s challenges at https://www.sgrvlaw.com/the-paycheck-protection-program-what-a-long-strange-trip-its-been/.)

In today’s race to “get back to normal”, however, businesses again face the same frenetic pace of change – but now at the same time as they try to recover from the shutdown. In recent days, businesses and nonprofits had to digest new rules for schools (https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/index.html), employee safety (Federal Register :: Occupational Exposure to COVID-19; Emergency Temporary Standard), and, of course, the ever-changing mask mandates (Pennsylvania’s universal mask mandate lifts Monday, but businesses can still require them – Philadelphia Business Journal (bizjournals.com)), all in real time – and the list could go on.

Businesses must also balance whether it is worth trying to get any of the massive amount of relief money that is still available (Small-business COVID-19 stimulus funds: What’s still available? (inquirer.com)), against the risk of criminal prosecution if the funds may later be deemed not “necessary”, with 20 – 20 hindsight.

(That choice just became easier with the Small Business Administration’s abandonment of its “loan necessity” questionnaire.  SBA officially drops PPP Loan Necessity Questionnaire requirement – Journal of Accountancy)

But all this talk about “normal” seems more than a bit surreal. After all, the virus is still here.  It is even surging in some parts of the country. People are still getting sick – and dying. Businesses must still devote time to try to keep up with all the rule changes. If all those burdens were not enough, PPP loan forgiveness deadlines are looming, albeit with promises of even easier procedures. SBA preps new PPP loan forgiveness portal for small businesses – Philadelphia Business Journal (bizjournals.com)

Unlike in 2020, however, at a personal level we now have safe and effective vaccines to protect us – for those who choose to be vaccinated. Some are skeptical about their safety, and prefer to “wait and see” – or even to risk avoiding vaccination totally.  Moreover, many are not yet eligible for a shot.  Children, in particular, and those with compromised immunity (such as transplant recipients) remain at risk. (The tests leading to the vaccines’ approval did not include children, although trials are ongoing.)

From an even broader perspective, there are not enough doses for much of the world. Calls for booster shots seem like first world privilege (https://en.wikipedia.org/wiki/First_World_privilege) to those who are still waiting for their first or second shot. And the vaccinated in the first world should care about this – quite a lot, actually. The virus doesn’t care where a potential victim lives.  A mutation in an unvaccinated person in Africa or South America could lead to an infection in the US or Europe that mutates to bypass the vaccines’ protection.

In short, according to Yale infectious disease physician Dr. Jaimie Meyer:

Even though we very much want this pandemic to be over … the fact that some people, including children, aren’t vaccinated means we’re still vulnerable. … While it might be exhausting to continue to take precautions, especially for unvaccinated kids, that becomes increasingly important.

Looking ahead, therefore, businesses’ desire to be done with virus and virus precautions, and get back to business – will not simply “make it so”, despite all our progress so far (with apologies to Captain Jean-Luc Picard). Although skipping protections – eating out without a mask, or attending a concert – may be less risky today than it was in 2020, business compliance costs and burdens have not gone away.

In the face of that reality, perhaps Nirvana’s “Feels Like Teen Spirit” offers a better soundtrack for 2021 than my high school anthem in the title of this alert: “I feel stupid and contagious.”

Copyright 2021 Stanley P. Jaskiewicz, Esquire

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Loan Details and Forgiveness

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Loan Forgiveness

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
*    Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
*    Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
*    Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
*    Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
*    Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
In addition, I have already seen much online criticism about the form and forgiveness process. (This is a partial list – I am sure many other discussions of the form and process can be found online.):

Click here to download the Paycheck Protection Forgiveness Loan Forgiveness Instructions and Application (https://www.sba.gov/document/sba-form–paycheck-protection-program-loan-forgiveness-application; https://www.sba.gov/sites/default/files/2020-05/3245-0407%20SBA%20Form%203508%20PPP%20Forgiveness%20Application.pdf).

Moreover, no one should be surprised if changes to the form and rules are announced before the end of the period to apply for forgiveness, given the many changes announced already. For example, the notes to the FAQ’s on the program show how often it has already been changed. https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf?utm_medium=email&utm_source=govdelivery. You should check the links in this message regularly for further updates – the rules have literally been created at the same time as the program has been rolled out. In particular, additional relief bills have been discussed in Congress which could affect PPP forgiveness, for example, by addressing the limits on rehiring employees in areas subject to a Stay at Home Order which makes such hiring difficult, if not impossible.
Nonetheless, I thought it worth sending you the link to the form, so that you and your accountant can begin to prepare what your bank lender will need to process your forgiveness application. You can also see where the implementation of the PPP program may not have matched its presentation – and discuss that concern directly with your lender. If you have questions on the PPP forgiveness (and recognizing that no one may yet have the answers, including the SBA), please contact Stanley Jaskiewicz at 215-241-8866 or sjaskiewicz@sgrvlaw.com, or Milton Cross at 215-241-8844 or mcross@sgrvlaw.com
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Was your business lucky enough to get a Paycheck Protection Loan?

If so, I am sure that you appreciated the cash relief.

But it wasn’t free money.

You – and your accountant – should be planning, now, for how to repay it.

The program’s rules have already been amended many times, without notice.

In other words, you must pay attention, to make certain that you will be able to obtain loan forgiveness, by showing that you used the funds for their intended purpose – to maintain payroll.

Certainly, you should ask your bank lender what it will require – but the bank may not yet know either.

Even worse, regulators have already announced audits of borrowers.

In response, many borrowers have already given back their loan proceeds. No one wants a call from a federal inspector, and the bad publicity that will come with it.

One rule even created a safe harbor for giving the money back – and the deadline has already been extended once, to May 14.

With loan rules seemingly being made up day to day, SGRV business lawyer Stanley Jaskiewicz recommends that borrowers plan, now, to keep detailed records of precisely how they used the funds, speaking in a series of interviews with a CBS affiliate news radio show. https://kcbsradio.radio.com/articles/answering-your-questions-about-small-business-aid

To simplify that process, he also recommended keeping all loan funds in their own, separate account.

Please contact Stanley Jaskiewicz directly at 215-241-8866, or sjaskiewicz@sgrvlaw.com, if you have questions about your Paycheck Protection Program loan, or other effects of the COVID-19 Stay at Home Orders on your businesses.

In addition to assisting clients with the Paycheck Protection Program, Jaskiewicz has also drafted letters for employees of essential businesses to carry while commuting to work in locations where such travel is otherwise prohibited.

The purpose of this email is to provide you with general information about current developments in the law that may be of interest to you. This information does not, and is not intended to, constitute legal advice or opinion. DO NOT send us any information concerning any potential legal matter or situation until you speak with a SGRV lawyer first and get authorization to send the information as directed by the lawyer. An unauthorized email sent to a SGRV lawyer will not be a confidential attorney-client communication and will not create an attorney-client relationship. An attorney-client representation is established only through our formal client acceptance and agreement process.

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You know that your business is “life sustaining” – and entitled to remain open despite the “stay at home” order which now restricts business in all of Pennsylvania – because you checked the latest version of the order at (https://www.governor.pa.gov/wp-content/uploads/2020/04/20200401-GOV-Statewide-Stay-at-Home-Order.pdf)
(The list of such businesses – already updated several times – is online at https://assets.documentcloud.org/documents/6816337/452553026-UPDATED-Industry-Operation-Guidance.pdf. Pennsylvania’s general guidelines are at https://www.pa.gov/guides/responding-to-covid-19/.)

However, the state trooper who sees your employees driving to work probably doesn’t know all those details, and may pull them over.

Although your employees may trust your instruction that they can drive to work safely, can they explain why to a uniformed officer under the pressure of a traffic stop?
So a citation on the way to work may seem inevitable if a trooper sees an employee driving to work – unless, of course, the employee can provide a brief, clear explanation of why the employee can still commute, when most people (including the author of this memo) can’t do so.

On the first day of enforcement of the stay at home order, a client pleaded for help after several of its employees had been detained in a rural county on their way to work.

After investigating the newly adopted rules, however, we recommended that our client’s employees carry a portable, one page explanation of why its employees were allowed to work and commute, complete with citations to the list of permitted businesses.

We also recommend our client’s suggestion, that its commuting employees carry a pay stub or other proof of employment by its essential business.

(However, you should not assume that the rules our client’s employees faced under Pennsylvania’s stringent rules are what your employees may face in your own location.  In addition to checking your local guidelines, the Department of Homeland Security lists “essential critical infrastructure” firms in its Guidance on the “Essential Critical Infrastructure Workforce” at https://www.cisa.gov/publication/guidance-essential-critical-infrastructure-workforce#.)
If your business is eligible to remain open during a stay at home order, we can assist you in preparing a letter which may be helpful in avoiding a citation should your employees be stopped while commuting.

Our employment and business law attorneys listed below can help you navigate these issues.

We hope that you and your business weather the COVID-19 storm.

Please contact Nancy Abrams or Jennifer Chalal for employment matters, or Peter Cripps, Joseph Devine or Stanley Jaskiewicz for business matters:

Nancy Abrams 215-241-8894 nabrams@sgrvlaw.com
Jennifer Chalal 215-241-8817 jmyers@sgrvlaw.com
Peter Cripps 215-241-8884 pcripps@sgrvlaw.com
Joseph Devine 215-825-8942 jdevine@sgrvlaw.com
Stanley Jaskiewicz 215-241-8866 sjaskiewicz@sgrvlaw.com

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Spector Gadon Rosen Vinci P.C. business lawyer Stanley P. Jaskiewicz has been selected to receive the prestigious Paul Quinn Award from The Timothy School in Berwyn, Pa.

The Award, which will be presented to Jaskiewicz at the school’s 27th Annual Golf Classic at Penn Oaks Golf Club in West Chester, Pa. on Monday, June 24, honors an individual who embodies the qualities exemplified by the late Quinn, a parent and respected volunteer of the school known for his giving nature, eagerness to help others and deep sense of service.

The Timothy School is the oldest nonprofit approved private school in Pennsylvania devoted exclusively to teaching students with autism.  For more than 50 years, the school has worked to develop an understanding of autism that recognizes the strengths and uniqueness of children and the specialized methods needed to expand their educational opportunities.

Jaskiewicz, the parent of an Eagle Scout and Honors graduate of Montgomery County Community College (who also happens to have Asperger’s Syndrome), ran Horsham Challenger Little League for 12 years, for players with disabilities, for which league sponsor the Rotary Club of Horsham awarded him with its Community Service Award in 2009.  He served several years on the board of a former Timothy School affiliate, Tim Academy, which trained teachers on how to instruct persons with autism, including as its President.

Jaskiewicz has been active in local and national advocacy groups for persons with autism for many years.  He was recognized by The Legal Clinic for the Disabled, Inc. in 2007 with its White Hat Award for 15 years of participation in its annual Stroll and Roll, which he first walked several years before his son was born.  He also served on the board of Manna on Main Street for nine years, a food pantry and social service agency in Lansdale, Pa., including as an officer, and remains active as a volunteer on its Resource Development Committee.  He is regularly quoted in news publications on both legal matters, and concerns of families with children with disabilities.

Registration details for The Timothy School’s 27th Annual Golf Classic can be found at http://timothyschool.com/event/golf-classic or by contacting Gene Sirni, Development Director, at 610-725-0755, ext. 234, or gsirni@timothyschool.com.

Spector Gadon Rosen Vinci P.C. has represented clients nationally and internationally for 45 years and provides counsel and expertise across the entire spectrum of legal practice, from complex litigation to sophisticated transactional and corporate matters.

The firm represents businesses, corporate boards, and highly placed individuals. Its clients are engaged in a variety of industries including finance and banking, manufacturing, hospitality, gaming and entertainment, real estate and commercial development, insurance and venture capital, energy, financial services, health care, security and telecommunications.

The firm’s practice areas include high stakes litigation, business disputes, commercial litigation, professional liability, products liability, securities, trust and estates, fiduciary litigation, bankruptcy and creditors rights, civil RICO, trade secrets, trademark and restrictive covenants, intellectual property, antitrust, white-collar criminal defense, banking and financial services, corporate formation and governance, cyber risk and security, employment, entertainment and amusements, environment and energy, wealth management, healthcare, hospitality, insurance coverage and insured casualty litigation, mergers, acquisitions and divestitures, real estate, sports and tax law.

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This year’s flood of privacy policy updates seem like déjà vu all over again, to quote the noted American intellectual, Yogi Berra.

Such notices to US businesses hit their stride in 2017, ahead of the May 25, 2018 effective date of the GDPR, the European data privacy law known officially as the “General Data Protection Regulation”. 

However, many correctly (in my opinion) chose not to do anything in response.  Whether the result of legal advice, or simple “why should I care” attitude, a purely domestic US business probably had no obligation to act under the European rule.

This year’s boom of such notices, however, hits much closer to home. 

The California Consumer Privacy Act was passed in June, 2018.  It regulates many firms that obtain personal information about “consumers”, defined as California residents – over 12% of everyone in the US, according to recent US Census data.  https://www.census.gov/popclock/?intcmp=w_200x402

Since California is the world’s fifth largest economy, according to recent US government data, US businesses can’t ignore its requirements.

Although California law’s doesn’t become effective until 2020 – seemingly leaving plenty of time for changes, or typical legislative postponements, especially after the law’s hasty passage in June – compliance could take some time.

•             Any business that sells to California consumers must give accurate privacy policy notices.

•             Businesses must police their supply chain for compliance with California’s law, whether or not the suppliers are located in California.

•             The law gives consumers the right to know what personal information about them is collected, how it is used, and even to require that it be eliminated from business records – the so-called “right to be forgotten”.

•             The law also gives consumers the right to sue for violations, including in class actions.

But why should businesses be concerned about yet another “urgent” call to action, or dire warning? 

After all, no one who spent money on Y2K compliance wants to repeat that fiasco.

But this time should be different:

•             Businesses today collect more and more data in the ordinary course, whether online, or through smartphone apps. 

•             After many highly publicized data breaches, consumers and lawmakers alike will demand more protection as the price of giving up that data for free.

•             The e-commerce revolution has led to much more data collection, regardless where a business or consumer may actually be located.

•             California regulators are known to be relentless.

•             The breadth of duties under the new law could take some time and considerable expense.

So, to answer the question in the title of this article – what to do now? – businesses should begin to understand what data they collect, where it is stored, and, more importantly, how it is protected.

For further guidance in this area, please contact Stanley P. Jaskiewicz, Esquire, at 215-241-8866 or sjaskiewicz@lawsgr.com or Ned Dunham, Esquire, at 215-241-8802 or edunham@lawsgr.com.

 

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Business lawyer Stanley Jaskiewicz of Spector Gadon & Rosen, PC, was recently recognized on the Donor Wall at North Penn Commons  for his service as a member of the Board of Directors of Manna on Main Street (www.mannaonmain.org) that approved formation of North Penn Commons.

Jaskiewicz served on Manna’s board from 2007-2016, including five years as Board Secretary, and chaired Manna’s Resource Development Committee. He also served on Manna’s 30th Anniversary Committee in 2011, and on its Executive Director Search Committee in 2012.

 

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Our society is fortunate that so many of us devote hours of time to unpaid, volunteer service.

Whether at a youth sports organization, school or place of worship, the best parts of our lives run on volunteer labor. At Spector Gadon & Rosen, PC, we are proud that many of our staff and professionals have invested countless hours of their own, unpaid time to improve our community.

For all the good that volunteers do, however, do you know that volunteer activities could lead to a criminal record?

That could be the result of laws recently passed in Pennsylvania and other states, which require that volunteers get “clearances” before they may come in contact with minors.

These new laws expand on more stringent existing rules for paid employees.

Unfortunately, the definition of who must get such clearances is often not clear – and as a result the complex rules are often ignored.

In my experience, the new laws’ attempts at the complex balance between the competing goals of weeding out predators and not discouraging volunteers often frustrate both potential volunteers and leaders.

Yet despite such ambiguity, the laws specify possible criminal penalties for leaders who do not enforce them, even if no child is ever harmed.

Many organizations have tried to provide “plain English” guidance, but often use undefined terms that reinforce such ambiguity – not a useful feature when volunteers risk criminal penalties for innocent mistakes.

For example, one prominent youth organization’s website touts “interpretations” of how the law affects its volunteers, without explaining their source, or how to get them.

Stanley Jaskiewicz, a business lawyer with Spector Gadon & Rosen, PC, has worked closely with these laws as a board member of several nonprofits.

To clarify his and his colleagues’ obligations, he spoke with the legislative staffers who wrote the law. He also attended continuing legal education training sessions on legal responsibilities of nonprofit leaders.

If you are involved with an organization that relies on volunteers who may come into contact with minors, he may be able to use his experience to help you determine what you must do – before you risk the bigger problem of allowing a predator access to children.
Moreover, as a practical matter, prosecutors may not want the negative publicity of going after a coach, or teacher.

But no organization wants the negative publicity or stigma that could arise just from the mention of possible charges, especially involving youth protection.

Please call Mr. Jaskiewicz at 215-241-8866, or write to him at sjaskiewicz@lawsgr.com, to discuss whether he can help your organization stay compliant, protect your volunteers from spurious abuse claims, and, most importantly, protect your children from predators.

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