We continue our efforts to keep you informed of key legal developments relating to COVID-19. Today, we are providing updates on federal economic assistance programs, as well as recent federal court rulings on the Governor’s stay-at-home order and local procurement opportunities. For our previous updates, please see HERE.
SBA Releases Loan Forgiveness Application
This week, the SBA released the Paycheck Protection Program (“PPP”) Application for Loan Forgiveness (“Application”) (see HERE). The Application clarifies some issues related to calculation of the forgiveness amount and required documentation. Borrowers seeking forgiveness are required to submit the Application and related documentation to the lender from whom they received (or who is servicing) their PPP loan.
The Application provides a calculation worksheet for borrowers to determine the eligible amount of loan forgiveness. Amounts used for payroll costs, business mortgage interest, rent and utilities are eligible for forgiveness as we explained in our prior update HERE. We highlight below answers provided in the Application to a few of the questions that we have been receiving from clients.
The Application does not state what documents a sole proprietor or partnership that does not have payroll and does not file 941s will use. There are also documentation requirements for mortgage interest, rent and utility payments.
Finally, there are documents that the SBA requires a borrower to maintain but are not required to submit. As we explained in a prior note (see HERE), the SBA has indicated that it does not plan to audit a borrower’s certification as to the necessity of the PPP loan if it is receiving $2 million or less in PPP funds.
Please feel free to reach out to us if you have questions on how to properly calculate your loan forgiveness amounts, given the guidance provided in the Application, or for any other issue.
In a prior update, we described the expansion by the Federal Reserve (the “Fed”) of the Main Street Lending program (see HERE). The program is aimed at mid-sized companies that are too large to access PPP loans (though businesses that have received PPP loans are not precluded from applying) but do not have easy access to the capital markets. Each of the three (3) types of Main Street Loans are for four (4) years with payments deferred in the first year.
Yesterday, Boston Fed President Eric Rosengren, whose regional bank is administering the program for the central bank, announced that the program will kick off by the end of May. Fed Chairman Powell has said that adjustments could be made to the program, including the minimum loan amount of $500,000, depending on demand. The Fed regularly updates its FAQs on the program on its website (see HERE).
Stay-at-Home Order Challenges
Governor Pritzker’s stay-at-home order has been challenged multiple times in court through different legal arguments. Recently, a federal judge for the Northern District of Illinois, Judge Robert Gettleman, rejected a constitutional challenge to the stay-at-home order from two Illinois churches. The churches claimed that the stay-at-home order violates the First Amendment of the U.S. Constitution. However, Judge Gettleman upheld the constitutionality of the stay-at-home order, ruling that “even the foundational rights secured by the First Amendment are not without limits; they are subject to restriction if necessary, to further compelling government interests — and, certainly, the prevention of mass infections and deaths qualifies. After all, without life, there can be no liberty or pursuit of happiness.”
The churches have appealed the decision to the 7th Circuit and requested an emergency injunction eliminating the stay-at-home order pending the outcome of the appeal. In a brief opinion (see HERE), the 7th Circuit denied the request for an emergency injunction, ruling that the churches had “not shown a sufficient likelihood of success on the merits to warrant the extraordinary relief of an injunction pending appeal.” Although the emergency injunction was not granted, the appeal is still pending in the 7th Circuit.
City of Chicago Procurement
The City of Chicago's Department of Procurement Services has been transitioning from paper bids to eProcurement online bids. Almost all active paper bid solicitations have recently been converted to the City's eProcurement system. As a result, the solicitation documents can now only be viewed under the eProcurement Bid Opportunities page.
Registration with the eProcurement system is not necessary to view bids, however, vendors must be registered in the system if they wish to bid on a project. The City has placed training materials on its website that explain how to register as a vendor and bid on projects. These materials can be found HERE. The City is also hosting online workshops for which pre-registration is required, including a virtual eProcurement workshop on May 21, 2020 at 2:00 pm. This workshop is open to all vendors interested in doing business with the City. Vendors can register for the event by clicking HERE.
We will continue to send periodic updates on topics that may be helpful to your businesses. If you have a particular issue that you’d like us to address or if you’d like to be removed from the distribution list, please let us know.
Feel free to contact us with any questions.
Gery Chico, Jon Leach, and Alpita Shah