Update: Get Ready! The Paycheck Protection Loans Are Almost Here
As a small business owner, this economic uncertainty is overwhelming. Work is slowing down or shutting down altogether. The employment laws have changed over night. Cash flows patterns are no longer reliable. Nothing seems to be as it was just a few short weeks ago.
To help with this, on March 27 Congress approved and the President signed the $2 trillion coronavirus stimulus package, called the CARES Act, sending $350 billion to the new Paycheck Protection Program (“PPP” for short). With many small businesses suffering from a loss of cash and funds, the PPP is aimed to give forgivable loans to help businesses make payroll and avoid laying off workers.
WHEN AND WHERE TO APPLY
The great news is that it appears that businesses can start applying for these loans tomorrow, April 3rd. The unrolling of the loans for certain business types, sole proprietor and independent contractors may not be available until April 10th. We’re still waiting to get confirmation of this from our financial institution, but relief should be here very soon and you should get your application materials ready. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov .
While the Cares Act is a new law, its PPP will use existing channels, including the 7(a) Loan Program (which offers loans to small businesses), to distribute the new PPP loans. Even though the PPP loans will use established channels, it is going to change much of the previous framework, on top of the changes already made from the March 6th stimulus law, the Coronavirus Preparedness and Response Supplemental Appropriations Act.
WHAT YOU’LL NEED TO DO TO APPLY
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for a sample application published by the SBA. The following is the general information and materials you will need to apply:
- Business information including EIN
- Average Monthly Payroll and number of employees on that payroll
- List of all owners of the business with 20% of more ownership
- List of all affiliated businesses
- History of receiving previous SBA loans
- Eligibility questions regarding criminal history, immigration status, etc.
- Historic payroll, mortgage, rent and utility information
EXPANSIONS OF PREVIOUS SBA ELIGIBILITY REQUIREMENTS
Now, with the new laws, the number of businesses eligible for loans has increased, providing additional assistance to those struggling to keep employees on payroll and maintain operations. this is how the stimulus laws will change the SBA’s small business loan programs:
Paycheck Protection Program (PPP)
- The maximum loan amount has been temporarily raised from $5M to $10M covering the time from between February 15, 2020 through June 30, 2020. The maximum of the loan will be equal to the lesser of $10M or the sum of 2.5 times the average monthly payroll cost in 2019. That includes wages for employees as well as for expenses associated with paid sick leave, health care, and other benefits.
- 100% of the loans, regardless of size, are guaranteed (temporarily). Traditionally, only 85% of loans up to $150,000, and 75% of those greater than $150,000, were backed by the SBA.
- Eligibility is given, temporarily, to any business with 500 or fewer employees, including charitable organizations, sole proprietorships, and independent contractors, regardless of whether the business qualifies under the SBA’s size standards as “small.” Normally, revenue standards are used to determine whether a company is eligible as a small business.
- The maximum interest rate for the loans is capped at 4%. Borrowers and lenders will still need to negotiate loan terms, which are a product of the prime rate, plus the LIBOR rate, but cannot exceed 4%. Before, fixed rate loans had a cap of 6%.
- Businesses do not need to show that they cannot obtain credit elsewhere. Prior to the changes, the inability to secure credit was a requirement.
- All annual or guarantee fees for the loan and all prepayment penalties are waived from the start. Traditionally, the SBA levied fees of 2-3.75% of the guaranteed portion of a loan.
- As of now, the SBA plans to have the distribution process in place tomorrow, April 3rd. The plan is to have the loans available to be disbursed the same day, when previously, SBA loans look 5-10 days.
- No personal guarantee or collateral will be required. Traditionally, lenders, for loans over $350,000, would be required to collateralize the loan to the maximum extent possible, up to the loan amount.
- The use of funds is expanded to include payroll support, paid sick leave, mortgage payments, rent payments, and servicing existing debt.
Loan Forgiveness
- As part of the PPP, the loans may be fully or partially forgiven for any portion of the loan that is used for payroll, paying utilities, rent, mortgage, and existing business debt, dollar for dollar. To be eligible for the dollar-for-dollar loan forgiveness, workers need to remain employed through the end of June. In the past, 7(a) loans needed to be repaid in full, depending on the repayment terms.
- In the case of a reduced number of employees, lenders can reduce the amount of the loan forgiveness, if the business lays off employees during the first eight weeks following the loan. Loan forgiveness is also reduced if wages of employees who earn less than $100,000/year are reduced.
- If businesses rehire employees after accepting the loan, if they had to let employees go before accepting the loan, they will receive additional credit to cover wages.
Debt Relief
- Existing borrowers can defer payment of interest, fees, and principal for up to six months, but no longer than one year.
What Changes have been made to SBA Express Loans?
- The maximum loan has been increased from $350,000 to $1M.
What Changes have been made to Economic Injury Disaster Loans (EIDL)?
- Statewide companies may apply for EIDL loans. Before, only companies located in certain counties could apply once the county had received specific disaster declaration.
- When before EIDL loans required a personal lien (such as on a home), now personal guarantees have been updated and in some cases, eliminated.
- Small businesses can request an immediate advance of $10,000, which will be released within three days of a request.
- No repayment on the loan is required if it is used for payroll, even if your EIDL loan application is denied later on.
If you're working for — or running — a business with under 50 employees, the Family and Medical Leave Act (FMLA) might seem like a distant federal regulation. But for eligible employees and covered employers, it’s a powerful tool for balancing work and life during major health or family events. Here's what you need to know. 🧩 The What The FMLA is a federal law that allows eligible employees to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specific family or medical reasons, including: The birth or adoption of a child Caring for a spouse, child, or parent with a serious health condition Recovering from a serious health condition themselves Certain military-related family needs The leave can be taken intermittently, in blocks, or in one long swath. During FMLA leave, employers must maintain group health benefits as if the employee were still working. When the leave ends, the employee is entitled to return to the same or an equivalent position. 👥 The Who FMLA is mandatory for employers with 50 or more employees within a 75-mile radius. So, if your business has fewer than 50 employees at a given location, you’re not legally required to offer FMLA leave —but you can choose to adopt similar policies voluntarily. Employees must also meet FMLA eligibility criteria: Worked for the employer for at least 12 months Logged at least 1,250 hours in the past year Work at a location with 50+ employees within 75 miles *State employees may have additional benefits provided under state law. Here, we’re discussing private employers and employees. 🛠️ Employer Takeaways Treating employees appropriately during their FMLA leave and upon their return can present some hurdles for employers and coworkers, particularly when an employee has been on leave for some time and, e.g., projects or programs have evolved in their absence. You don’t have to navigate these situations alone; we can provide your team with the tools and information necessary to smoothly navigate the full FMLA process and avoid any sticky FMLA retaliation or interference claims. And, even if you’re not legally bound by FMLA, offering comparable leave can be a smart move. It builds trust, boosts retention, and shows you value your team’s well-being. Consider crafting a voluntary leave policy that mirrors FMLA protections, including: Clear eligibility rules Defined leave duration Job protection guarantees Coordination with paid time off or disability benefits For small businesses, this means you have flexibility—but also responsibility to communicate policies clearly. Want to overhaul those policies or craft great messaging to your team, give us a call! We’re here to make leave policies less painful and more practical. 📣 Employee Takeaways If you work for a small Utah employer, ask about your company’s leave policies. While FMLA doesn’t require you to use your accrued leave during your FMLA leave, it allows your employer to write into its policy a requirement that you do so. Make sure you read that policy! And, even if FMLA doesn’t apply, your employer may offer benefits similar to FMLA. If you’re dealing with a serious health issue or family emergency, document your situation, give notice as early as possible, and follow internal procedures. Need help understanding those procedures or your rights as an employee? We got your back! ⚖️ Final Thoughts FMLA is more than a legal acronym—it’s a lifeline for employees facing life’s biggest challenges. For Utah employers, understanding the law and choosing to offer similar protections can set your business apart. Whether you're an HR manager, CEO, or a team member, knowing your rights and responsibilities helps everyone navigate leave with clarity and compassion.
So, you’ve got an employee that wants to teach a night class? Drive for a ride share? Pursue a passion project on the side? That’s great…. Right? You can ensure it’s great for both you and your employee by entering a non-compete, non-solicitation, non-disparagement, and/or non-disclosure agreement and setting clear workplace boundaries . Non-Compete Agreements can help employers do damage control when an employee wants to branch out. Non-competes alone are limited, but when properly crafted and paired with the other agreements listed above, they can provide peace of mind and protection to employers. Utah law takes a close look at these agreements when it comes to enforceability, so don’t go it alone when it comes to crafting one. Boundaries Set boundaries with your employees on the use of their time, your equipment, and your company’s other resources like client lists or IP. And pay close attention with remote or telework employees where boundaries may be squishier. Here’s some examples where lines may get blurred: Can the employee use the office printer, or their allotted printing budget for their teaching gig? What if it’s just a couple sheets of paper? What if it’s their 100-page course outline? Maybe. Do you have an equipment policy that allows employees minor personal usage of the office equipment? Does it define “minor”? Might you want to update that policy if it doesn’t provide the clarity you need? We can help! Can the employee pick up a ride share client in the company vehicle while they’re out running an errand for the company What if it’s their personal vehicle? What if the trip is along the way, no deviation? Definitely not the company vehicle for insurance purposes of carrying a random person around. But otherwise, this raises the charmingly titled legal doctrine of “frolic and detour” where it is much less messy in terms of liability (for accidents, etc.) if the employee does not engage in personal errands while on the clock, when they’re supposed to be completing your company’s business. No double dipping. No frolicking, as tempting as frolicking sounds. Can they email one of the company’s clients with a question that’ll help them move things forward on their side project? Generally, probably not, especially if you have a non-solicitation agreement in hand. But, it may depend on more details than this scenario offers. When in doubt, talk about it with your employee, get an idea of what their end game is, and give us a call if you need a sounding board. Need help handling questions like these, updating policies, or putting together a non-compete agreement? We can help!
Starting January 1, 2024, a new rule took effect requiring all registered legal entities, including limited liability companies and corporations, to report their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). We wanted to give you a heads up about the rule and give you as much information about what it means to you. What is the rule? The rule, which is called the Beneficial Ownership Information Reporting Requirements (BOI Rule) , comes from the Corporate Transparency Act, which was passed by Congress in 2021. This law created the BOI Rule with FinCEN as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other deceitful ownership structures. Under this new law, FinCEN will permit Federal, State, and local officials to obtain ownership information for authorized activities related to national security, law enforcement, and intelligence. When does the rule take effect? And when do I have to submit a report? The BOI Rule took effect on January 1, 2024 . If your company existed before January 1, 2024, you must file its initial beneficial ownership information report by January 1, 2025 . If your company is formed or registered after January 1, 2024, you must file its initial beneficial ownership information report within 90 days after receiving actual or public notice that its creation or registration is effective. If any beneficial ownership information changes, you will have 90 days from the day of the change to file an updated or corrected report with FinCEN. What if I don’t file a Report? According to FinCEN: “The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of an entity that fails to file a required BOI report may be held accountable for that failure.” What do I need to include in the report? The BOI Rule requires that all entities report information about the company, each individual with substantial control over the entity, and each beneficial owner. What information is required to report about the entity? Full legal name of your company and any DBAs names; Complete current street address for your company's principal place of business (P.O. boxes will not be accepted); The jurisdiction of formation or registration; and Tax identification: IRS tax identification number (TIN) and employer identification number (EIN). What information is required to report about the controlling individuals and beneficial owners? The individual's legal name; Individual's date of birth; Individual's residential address; and A unique identifying number from an acceptable identification document (such as an unexpired driver's license, passport, identification document issued by a State or local government or Indian tribe) and the name of the issuing state or jurisdiction. Who is considered to have substantial control of the entity? Examples of an individual that exercises substantial control over the entity are: An individual is a senior officer (President, CEO, CFO, COO, Manager, or other office who performs a similar function); An individual has the authority to appoint or remove certain officers or a majority of directors of the reporting company; An individual is an important decision-maker for the company; or An individual has any other form of substantial control over the company. Who is considered a beneficial owner? A beneficial owner is an individual that owns or controls at least 25% of the entity’s ownership interests. This includes individuals that indirectly own or control 25% of the ownership interest. For example, if Joe is a 50% owner of Parent LLC, which in turn owns 50% of Subsidiary Corp, then Joe beneficially owns 25% of Subsidiary Corp (50% of 50% = 25%). What type of entities will be required to file a report with FinCEN? All domestically formed entities and foreign registered entities in the USA are required to file a report. Types of entities include corporations, limited liability companies, limited partnerships, general partnerships, and any other entity registered with a state Secretary of State or Division of Corporations or other similar office. There are some types of companies that are exempt from the reporting rule, and in general they are companies that already have to report beneficial ownership to another federal agency. The 23 exemptions listed by FinCEN are: Securities reporting issuer, Governmental authority, Bank, Credit union, Depository institution holding company, Money services business, Broker or dealer in securities, Securities exchange or clearing agency, Securities exchange or clearing agency, Other Exchange Act registered entity, Investment company or investment adviser, Venture capital fund adviser, Insurance company, State-licensed insurance producer, Commodity Exchange Act registered entity, Accounting firm, Public utility, Financial market utility, Pooled investment vehicle, Tax-exempt entity, Entity assisting a tax-exempt entity, Large operating company, Subsidiary of certain exempt entities, and Inactive entity. Can you help me with my company’s report? Yes! We are happy to help prepare and file your company’s BOI Rule report with FinCEN before the December 31, 2024 deadline. We offer a flat-fee service that is discounted based on how early you pay and submit your information. Sign up for our BOI Rule report service HERE. We also know that some situations can be complicated, so please feel free to ask us any questions regarding compliance with the beneficial ownership interest reporting requirements for your company by emailing teamjosh@freemanlovell.com .
