Pub. 12 2021 Issue 1

Pub. 12 2021 I Issue 1 Spring 23 West Virginia Banker Matthew Kingery is of counsel with Lewis Glasser, PLLC, in Charleston, West Virginia. Matt devotes his practice to commercial transactions, lender representation, commercial development, distressed assets and real property matters with an emphasis on title, acquisitions, sales and financing issues. Matt has been recognized for his work in the legal industry and community and has received numerous awards including being selected multiple times in Super Lawyers® in the practice area of real property law; named the 2010 West Virginia State Bar Young Lawyer of the Year; honored as a recipient of the 2009 Generation Next 40 Under 40 award by The State Journal; and named a Young Gun by the West Virginia Executive in 2017. He can be reached at mkingery@lewisglasser.com. On Dec. 27, 2020, President Trump signed legislation approving a $900 billion COVID-19 relief package, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“Act”). In addition to long- awaited stimulus checks for Americans, the Act assists small businesses mainly by revamping the PPP. showed that in the spring of 2020, 43.2% of small businesses that received first-round PPP funds felt they would survive over the long haul as a result of receiving those funds. However, this data was gathered before the second surge triggered many business closings. On Dec. 27, 2020, President Trump signed legislation approv- ing a $900 billion COVID-19 relief package, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (“Act”). In addition to long-awaited stimulus checks for Ameri- cans, the Act assists small businesses mainly by revamping the PPP. The second round of PPP made an additional $284.5 billion in economic aid available, with $137 billion set aside for “second-draw” loans for firms that need help beyond their initial loan. The legislation that created the second round of federal funds for small businesses seeks to clean up some of the problems experienced in round one by limiting access to businesses that can demonstrate a hardship. The Act changed PPP in three primary ways. First, the Act changes the PPP rules for existing PPP loans, new PPP loans and PPP second draws. These rule changes affect the areas of eligibility, allowable expenses, forgiveness and more. Second, the Act allows new PPP loan applications to be submitted by eligible applicants that never obtained a PPP loan. Third, the Act provides a “PPP second draw” for some businesses that have already received a PPP loan. The SBA has issued a flurry of guidance implementing the Act. The increased funding and eligibility guidelines have added complexity to the PPP rather than simplifying the process. The forgiveness process has been made easier for businesses that use the majority of the money for payroll and makes the loans tax-free. Before passage of the Act, borrowers that received an EIDL Advance (advances between $1,000 and $10,000) had that amount subtracted from their total forgiveness. The Act now provides that EIDL Advances will not reduce PPP loan forgiveness. The SBA has indicated that borrowers who have already received forgiveness may amend their forgiveness applications. Also, Section 501(c)(6) not for profit organizations became eligible for PPP loans for the first time. These businesses are eligible so long as (1) they do not receive more than 15% of their receipts from lobbying activities, (2) lobbying activities do not comprise more than 15% of the organization’s total activities, (3) the cost of lobbying activities did not exceed $1 million during the tax year ending Feb. 15, 2020, and (4) the organization does not employ more than 300 employees. The Act also provides that borrowers in bankruptcy are eli- gible to apply for PPP loans. These loans are treated in the borrower’s bankruptcy case as administrative claims and, to the extent not forgiven, must be paid in full in any Chapter 11 cases and are not subject to “cram down.” When this article was drafted, second-round PPP applica- tions were well underway, but the new Biden administra- tion was just taking shape. Recent news reports make it appear that further COVID stimulus will soon be approved. Financial professionals will be well served to pay attention to news coming from Washington to be prepared to advise their customers as existing programs continue to be modi- fied and new programs are brought to bear. 