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Other Sources of Funding for Philly Businesses Impacted by COVID-19

April 3, 2020

In addition to the recently created loan and grant programs spearheaded by the federal government and the City of Philadelphia for small businesses impacted by Covid-19, there are other sources of funding which small businesses may wish to consider applying for.

LISC’s Verizon Small Business Recovery Fund

The Local Initiatives Support Corporation (LISC) is accepting applications for its Verizon Small Business Recovery Fund.

The fund provides grants of up to $10,000 to businesses facing immediate financial pressure due to COVID-19—especially entrepreneurs of color, women-owned businesses and other enterprises in historically underserved communities who do not have access to flexible, affordable capital.

The deadline to apply is April 4, 2020.

Loans and Lines of Credit Through PIDA

While the Pennsylvania Department of Community and Economic Development is no longer accepting application through its COVID-19 Working Capital Access Program due to overwhelming response, the Pennsylvania Industrial Development Authority (PIDA) offers low-interest loans and lines of credit for eligible businesses that commit to creating and retaining full-time jobs and for the development of industrial parks and multi-tenant facilities.

These loans may be used for land and building acquisitions, construction and renovation costs, machinery and equipment purchases, working capital and accounts receivable lines of credit, multi-tenant facility projects and Industrial park projects. 

A variety of different industry sectors are eligible for PIDA financing including manufacturing, industrial, research and development, hospitality, defense conversion, recycling, construction, child day-care, retail and service, export, and computer-related service enterprises. The PIDA program finances a portion of total eligible project costs. 

The maximum participation amount is determined by a variety of factors such as the proposed use of the funds, the business type applying for financing, the amount of matching financing from sources outside of PIDA, and the number of full-time jobs to be retained or created. 

The terms of the loans are up to 15 years for land and building acquisitions and construction/renovation projects and up to 10 years for machinery and equipment purchases. 

Working capital and accounts receivable lines of credit have a term of 1 year and can be renewed. 

Interest rates for the program are based on current market conditions. 

Loans and Lines of Credit Through PIDC

Loans and lines of credit are also available through the Philadelphia Industrial Development Corporation (PIDC).

In particular, PIDC offers a Working Capital & Equipment Loan Program which provides for loans between $50,000 and $750,000 to businesses and non-profit organizations which employ 4 or more employees and are located in the City of Philadelphia. 

Loans under this program can be used for working capital, equipment, or leasehold improvements to support growth.  To qualify, a business must have revenue between $150,000 and $10 million and have been in operation for at least 2 years. 

To learn more about other financing options with PIDC, click here.

If you have any question about any of these governmental loan and grant programs or other sources of funding for your small business, please feel free to contact us at contact@nochumson.com and an attorney at Nochumson P.C. will immediately reach out to you to schedule a free consultation.

PA Allows for Remote Online Notarization to Close Some Real Estate Transactions

April 1, 2020

In response to the governmental order prohibiting real estate closings from taking place at a physical location within the Commonwealth, Pennsylvania Governor Tom Wolf has approved a waiver temporarily suspending the personal appearance requirement under Pennsylvania law to allow notaries to carry out their duties remotely for the following real estate transactions:

  • personal real estate transactions where the agreement of sale was executed by the parties prior to the effective date of the governmental restriction.
  • all commercial real estate transactions, including those already in process as well as new ones.

Based upon the foregoing, sellers and buyers will be able to execute closing documents outside the physical presence. 

In order to do so, however, a notary who wants to use audio-visual technology as an alternative to a personal appearance must:

  • become an approved Pennsylvania electronic notary by submitting a free application;
  • use an e-notary solution already approved by the Commonwealth of Pennsylvania’s Department of State that offers remote online notarization (RON) technology; and
  • indicate in the notary certificate that the notarial act was performed by means of communication technology, with the following statement satisfying that requirement: “This notarial act involved the use of communication technology.”

The RON providers approved by the Commonwealth of Pennsylvania’s Department of State are:

  • DocVerify  (for general use)
  • Safe-Docs (for general use)
  • Pavaso (for title companies and other real estate transactions)

If you have any questions about how to consummate a real estate closing remotely in Pennsylvania, please feel free to contact us at contact@nochumson.com and an attorney at Nochumson P.C. will immediately reach out to you to schedule a free consultation.

What Small Businesses Need to Know About Applying for and Obtaining Loans Under the CARES Act

March 31, 2020

On Friday, March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted into law which allows small- and, in some cases, mid-sized businesses to receive loans guaranteed 100% by the federal government through the U.S. Small Business Administration (SBA) to fund their operational expenses while they are struggling to deal with the negative impacts they have sustained due to the Covid-19 pandemic.

The CARES Act is essentially divided into two federal loan programs for small businesses — Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDLP).

Paycheck Protection Program

PPP, which amends Section 7(a) of the Small Business Act, sets aside $350 billion in federal government-backed loans to help businesses cover their payroll costs and other business expenses during the COVID-19 pandemic:

  • Loans under PPP are primarily available for a business with not more than 500 employees. 
  • The amount of money a business may borrow under PPP is based upon a formula equal to the lesser of average monthly payroll costs for that business during the prior year multiplied by 2.5 and $10 million.  To illustrate, if the business had an average monthly payroll of $50,000 over the prior year, it would be eligible for a loan of $125,000.
  • Loans under PPP will accrue at a rate of interest not to exceed 4% per annum and such loan payments may be deferred for no less than 6 months and no more than 1 year.
  • Loans under PPP may be used to cover business expenses from the time period of February 15, 2020 through June 30, 2020, including payroll costs (pro-rated based on a maximum employee annual salary of $100,000), employee benefits and leave, mortgage interest payments, debt refinancing, rent, and utilities.
  • A business which obtains a loan under PPP may have some or all the loan forgiven so long as the business continues paying their employees at normal levels during the 8 weeks following the origination of the loan.
  • Under PPP, the personal guaranty requirement typically associated with a loan made under Section 7(a) of the Small Business Act are waived.
  • Moreover, under the PPP, a business is not required to demonstrate that the business is unable to obtain credit from other sources.
  • Loans made under the PPP “shall have no recourse” against any individual shareholder, member or partner of a loan recipient unless the borrowed funds are used for an unauthorized purpose.
  • Under the PPP, the standard fees typically assessed under section 7(a) of the Small Business Act are waived.
  • The deadline for a business to apply for a loan under PPP is June 30, 2020.

Economic Injury Disaster Loan Program

The CARES Act also contains provisions expanding the scope of SBA’s existing EIDLP under Section 7(b) of the Small Business Act.

  • Similar to PPP, EIDLP applies primarily to businesses with no more than 500 employees, waives the personal guaranty requirement, and the requirement for a business to demonstrate that the business is unable to obtain credit from other sources.
  • The loan proceeds may be used to pay fixed debts, payroll, accounts payable and other costs, but are not intended to replace lost sales or profits and cannot be used for certain purposes, including to refinance debt, make payments on loans owed by another federal agency, to pay tax penalty obligations, repair physical damages, or to pay dividends to stockholders.
  • To be eligible for a loan under EIDLP, a business must be physically located in a declared disaster area and suffered working capital losses due to the declared disaster (not due to a downturn in the economy or other reasons).
  • Under EIDLP, interest for a loan will accrue at the rate of interest not to exceed of 3.75% per annum. 
  • The loan amount for a business under EIDLP shall not exceed $2 million.
  • Loans under EIDLP will be available until December 31, 2020, unlike the PPP which are only available through June 30, 2020.
  • Under EIDLP, a borrower may obtain an emergency advance of $10,000 within 3 days of submitting a loan application and, while the loan application is pending, such emergency advance will not be required to be repaid.
  • Loans under EIDLP offer long-term repayments in order to keep payments affordable, up to a maximum of 30 years.

Other Considerations

In addition to the provisions set forth above as to these federal loan programs:

  • Loans will be available under both PPP and EIDLP immediately through SBA-certified lenders, which include banks, credit unions, and other financial institutions, and the SBA will also be required to streamline the process to include additional lenders into the program and to ensure that funds are dispersed to qualified businesses as soon as possible.
  • Businesses can obtain a loan under both PPP and EIDLP so long as the loan proceeds do not pay for the same business expenses.
  • Under the CARES Act, the SBA is directed to pass emergency regulations to implement these federal loan programs within 15 days after its enactment.

If you have any question about these newly enacted federal loan programs, please feel free to contact us at contact@nochumson.com and an attorney at Nochumson P.C. will immediately reach out to you to schedule a free consultation.

How the Federal Government’s $2.2 Trillion Stimulus Package Assists Individuals During the Covid-19 Pandemic

March 30, 2020

On Friday, March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), a $2.2 trillion stimulus package, designed to alleviate the impact of the Covid-19 epidemic on individuals and businesses. 

While the CARES Act provides substantial benefits to small- and, in some cases, mid-sized businesses which will be discussed at length in another Legal Alert, individuals struggling during this pandemic should be mindful of the following provisions of the CARES Act to take advantage of:

Direct Payments to Taxpayers

Single individuals with an adjusted gross income of $75,000 or less will get a one-time payment of $1,200. Married couples with no children earning $150,000 or less will receive a total of $2,400. Those with children will get an and an additional $500 per each child.  The payment will scale down by income, phasing out entirely at $99,000 for single individuals and $198,000 for married couples without children.

Extension of Unemployment Compensation Benefits

Individuals who are not working, working part-time, or are too sick to work will get $600 per week for four (4) months from the federal government in addition to the state benefits they will receive. In addition, the federal government will cover an additional 13 weeks of extended benefits beyond that of the states. 

Significantly, this benefit will cover those who do not meet the definition of “employee” such as independent contractors, gig workers, and self-employed individuals.

Student Loan Payments

There will be automatic payment suspensions until September 30, 2020 for any student loan held by the federal government.

Foreclosures and Evictions

Individuals and entities with mortgage loans affected by the virus can obtain forbearance on their federally backed mortgages for up to 60 days, with a possible extension of 4 more periods of 30 days. Servicers of federally backed mortgages are barred from beginning any foreclosure proceedings for 60 days. Fees, penalties and additional interest cannot be charged for delayed payments.

As for individuals and entitles with federally backed mortgage loans on multifamily properties, they can receive 30 days of forbearance with up to 2 additional 30-day periods available. In exchange, they may not evict tenants for failure to pay rent for 120 days and may not charge penalties or fees for nonpayment of rent.

If you have a question about any options available to you under the CARES Act, please email us at contact@nochumson.com and, in the email, provide your name and contact information and an attorney at Nochumson P.C. will respond accordingly.

Businesses Can Apply For a Waiver to Reopen Their Physical Operations in Pennsylvania

March 27, 2020

Although Pennsylvania Governor Tom Wolf has ordered the closing of the physical operations of non-life sustaining businesses in the Commonwealth of Pennsylvania, his administration will continue considering waiver requests.

A business requesting such a waiver must submit an application online.

The primary questions the business must answer in the application are:

  1. How does the business meet the definition of “life-sustaining”?
  2. Does the business have a plan to meet CDC-recommended guidelines to maintain employee safety during the Covid-19 pandemic?

In answering the first question above, please keep in mind that Merriam-Webster Dictionary defines the word ‘life-sustaining’ as “helping someone or something to stay alive; supporting or extending life”.

Based upon this definition, there are many businesses which the Commonwealth has not classified as life-sustaining which should fall into that category.

In answering the second question above, the business must specify how it will comply with such guidelines recommended by the CDC to maintain employee safety.

All applications requesting such a waiver will be reviewed by a team of professionals at the Pennsylvania’s Department of Community and Economic Development and responses will be based upon balancing public safety with the ability to continue delivering critical infrastructure services and functions.

A business requesting a waiver will be notified by e-mail if it can resume physical operations.  Until and unless such an application is approved, however, the business’s physical operations must remain closed.

For assistance in completing the application, please feel free to contact us at contact@nochumson.com and an attorney at Nochumson P.C. will immediately reach out to you to schedule a free consultation.