The plethora of economic policy commitments to support business in the UK and the US in the face of COVID-19 can be difficult to navigate. Our lawyers recently held a webinar in conjunction with PLI to provide an overview of the various support schemes implemented in the UK and the US, focusing on UK schemes such as the Coronavirus Business Interruption Loan Scheme (“CBILS”); UK Coronavirus Job Retention Scheme (aka Furlough Scheme); the COVID Corporate Financing Facility (“CCFF”); and on Financial Conduct Authority (“FCA”) reforms and working capital assistance for UK listed companies. It also considered emergency relief measures in the US, including the Federal Reserve’s Paycheck Protection Program Liquidity Facility.

Continue Reading COVID-19: UK and US Economic Support Mechanisms

The US Small Business Administration (“SBA”) has now formalized certain borrower-friendly changes to the Paycheck Protection Program (“PPP”) provided for by the PPP Flexibility Act. A new Interim Final Rule (“IFR”) follows an informal joint press release on June 8, 2020 by the Department of the Treasury and SBA that previewed program changes. The SBA also issued a revised PPP Borrower Application Form and a revised PPP Lender Application Form conforming certain certifications to the program revisions and making other changes. Revised forgiveness application forms and instructions have not yet been released, but are anticipated in the near future.

Continue Reading SBA Issues New Rule, Revised Borrower/Lender Application Forms Implementing PPP Flexibility Act

Borrowers under the Paycheck Protection Program (PPP) are breathing a sigh of relief after the US Senate approved legislation yesterday that will ease some of their biggest concerns about PPP loans. H.R. 7010, “The Paycheck Protection Program Flexibility Act of 2020,” was adopted by the US House of Representatives last week, and is expected to be signed by the President soon.

The most significant changes concern loan forgiveness and apply to both existing and new loans. Prior to this legislation, PPP borrowers could only obtain forgiveness for amounts spent in the first eight weeks after receiving their loan. That “covered period” for forgiveness has now been extended to twenty-four weeks, or December 31, 2020, whichever is earlier, providing borrowers a lot more leeway to obtain forgiveness, particularly if they are not ready or able to fully reopen their businesses now.


Continue Reading US Congress Enacts Legislation to Give PPP Borrowers Added Flexibility

As US businesses begin to reopen, LegalTech News/Law.com (subscription required) asked lawyers how their firms are leveraging technology to inform clients on states’ and local governments’ evolving reopening requirements.

Lawyers interviewed for the May 26, 2020 article say that their firms’ COVID-19-related tech resources were developed to be planning tools for clients rather than marketing

While the second round of Paycheck Protection Program (“PPP”) funding remains available for new applicants, the first round is about to enter a new phase—loan forgiveness. Under the PPP, up to the full amount of the loan may be forgiven if the borrower spends proceeds on eligible payroll, mortgage, rent, and utilities expenses in the eight weeks following loan origination (subject to certain limitations, including that not more than 25% of forgiveness may be based on eligible non-payroll expenses). Forgiveness will be reduced for employer reductions in headcount and for certain reductions in salaries/wages in excess of 25% for any employee making less than $100,000 on an annualized basis during the eight-week period as compared with pre-COVID-19 conditions. To facilitate the forgiveness process, the SBA has now issued a PPP Forgiveness Application (SBA Form 3508). Borrowers that plan to seek forgiveness should carefully review the form and its instructions in advance of submission to their lenders or current servicers.

Continue Reading US SBA Paycheck Protection Program (PPP) Forgiveness Application

On May 18, 2020, the US Small Business Administration (SBA) released its twelfth interim final rule (IFR #12) on treatment of entities with foreign affiliates and purporting to “clarify” its own prior “guidance” noting that:

“Some market participants have indicated that there may be uncertainty regarding whether PPP applicants must include employees of foreign affiliates in their employee counts, because SBA has previously issued guidance stating that an entity is eligible for a PPP loan if it has 500 or fewer employees whose principal place of residence is in the United States. See 85 FR 20811, 20812 (April 15, 2020).”


Continue Reading Now We Know it Was “Mud”: The SBA “Walks Back” Its Prior Rules and FAQs Regarding Treatment of Foreign Affiliates

Today, just one day before the safe-harbor deadline for returning Paycheck Protection Program (PPP) loans, SBA released new guidance (FAQ # 46) on the good-faith certification of economic uncertainty. While this new guidance does not provide the clarity that many borrowers were seeking, it appears to reduce the risks associated with this certification by adopting a new safe harbor for loans under $2 million and limiting the potential penalties for loans above $2 million.

Continue Reading New SBA Guidance May Reduce the Risks to Borrowers Making the Certification of Necessity for Paycheck Protection Program Loans

As the world begins to contemplate a post-lockdown reopening of business and society, the global insurance magazine Reactions (subscription required) turned to our COVID-19 Response Team for insight on the delicate art of returning to normalcy.

Mayer Brown lawyers interviewed for the article discuss the challenges many businesses will face as they grapple with social-distancing

The US Small Business Administration has extended the safe harbor period for PPP loan return until May 14, 2020, stated that it will provide further guidance regarding the PPP necessity certification, and added confusion regarding the employee-size standard.

In yesterday’s FAQ #43, the US Small Business Administration (SBA) stated:

  1. Question: FAQ #31 reminded borrowers to review carefully the required certification[1] on the Borrower Application Form that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA guidance and regulations provide that any borrower who applied for a PPP loan prior to April 24, 2020 and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith. Is it possible for a borrower to obtain an extension of the May 7, 2020 repayment date?


Continue Reading Another Day with the Paycheck Protection Program: US SBA “Tweaks” the Rules (Yet Again)

The Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) is now available to non-bank PPP lenders to finance Paycheck Protection Program (“PPP”) loans that they originated or purchased.  While the PPPLF was previously only available to depository institutions to finance PPP loans that they originated, the Federal Reserve revised its eligibility criteria on April 30,