Business Law

Published on: June 11, 2020

Ongoing Changes to the Paycheck Protection Program Help New Jersey Small Businesses

As a result of the Coronavirus (“COVID-19”) pandemic, the federal government has passed several pieces of legislation in an attempt to provide relief to struggling businesses. One of these Acts is the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”). However, since this legislation was signed empty-office into law, the CARES Act has been subject to various interpretations, pitfalls, and continuously-evolving government guidance.

The CARES Act created and allocated approximately $350 billion to the Paycheck Protection Program (“PPP). However, those funds were almost immediately depleted by millions of businesses seeking assistance and the government thereafter allocated an additional $175 billion to the PPP.

The PPP provides loans to struggling businesses in the amount of two and a half times the small business’s average monthly payroll costs. Thus, if the average monthly payroll is $50,000, the business might be eligible for up to $125,000 in PPP loans. While the PPP is considered a loan program, the funds may be largely (or entirely) forgiven as long as the business uses the funds for approved expenses which are appropriately documented. However, like most aspects of the CARES Act and the PPP, there has been a great deal of uncertainty surrounding the specific requirements for loan forgiveness. The SBA (the United States Small Business Administration) alone has posted supplemental rules and guidance on the matter more than ten times in two months. Thus, as a result, the Paycheck Protection Program Flexibility Act was passed on June 5, 2020 amending the CARES Act. This new law has important ramifications for New Jersey small businesses.

Published on: June 8, 2020

The Small Business Reorganization Act and Subchapter 5 Bankruptcies

by Robert Chewning, Esq.

Hi, I’m Rob Chewning. I work with the firm of McLaughlin & Nardi, LLC. At the firm we practice several different types of law, including bankruptcy law. I am here today to talk to you about The Small Business Reorganization Act and Subchapter 5 bankruptcies.

As a result of COVID-19, millions of small businesses have been forced to shut down and cease business operations indefinitely with no end in sight. Some of these small businesses have tried to hold on in the hope of getting federal stimulus money that can carry them through this tough time. However, there are several million other businesses which will not be eligible or will not be able to get their hands on this federal stimulus money which is causing them to consider the options that they have.

Published on: June 2, 2020

Ensuring Maximum Forgiveness on Paycheck Protection Program (PPP) Funds Under the CARES Act

by Pauline M.K. Young

As a result of the Novel Coronavirus (“COVID-19”), the federal government has passed significant legislation in an attempt to provide relief to businesses small-business-300x215 struggling with economic hardships as a result of widespread closures and stay-at-home orders. One major part of these governmental actions includes the passage of the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”) on April 2, 2020.

The CARES Act provides for approximately $2 trillion in aid through expanded unemployment assistance, individual relief checks, tax credits, loans, and grants to businesses which were closed or significantly effected by COVID-19, and funding to hospitals and health care facilities. Of this, approximately $350 billion was allocated to the CARES Act’s Paycheck Protection Program (“PPP). When that money was almost immediately sought by the millions of businesses seeking assistance, an additional $175 billion was additionally allocated.

The PPP limited its funding to each company to two and a half times the company’s average monthly payroll costs. While the PPP is considered a loan program, the funds may largely (or entirely) be forgiven as long as the company uses the funds for approved expenses. The details of exactly which expenses would be considered approved and how these funds could be used has been the subject of much uncertainty over the past several weeks. Indeed, the SBA (Small Business Administration) has posted additional rules and guidance on the matter more than 10 times in two months.

Published on: May 14, 2020

Bankruptcy Considerations During the Coronavirus (COV-19) Part 4: The Small Business Reorganization Act and Subchapter 5 Bankruptcy

by Robert Chewning, Esq.

As a result of the Coronavirus (COV-19), millions of small businesses have been forced to close their business operations entirely with seemingly no end in sight. small-business-300x200 Naturally, this has led to a spike in bankruptcy filings. However, many small businesses have held out hope for federal stimulus aid before deciding on whether bankruptcy is the right option for them.

The enactment of a new bankruptcy law, the Small Business Reorganization Act, may provide small businesses suffering from COV-19 related financial issues with relief. The purpose of the act was to make the benefits that larger business entities may take advantage of when filing for a Chapter 11 reorganization bankruptcy easier to access for smaller business entities seeking relief from debt without going out of business. The Act simplifies the process by allowing small businesses to file a Subchapter 5 bankruptcy reorganization.

Published on: April 21, 2020

The Automatic Stay in New Jersey Bankruptcy: Financial Relief During the COV-19 Outbreak

by Robert Chewning, Esq.

national-gallery-of-art-1380105-m-300x248 Since the COV-19 outbreak began, more than 22 million Americans have filed for unemployment. The increase in unemployment filings have been the result of businesses of all sizes being forced to shut down entirely or significantly limit their operations. As a result, many people, both employers and employees, are seeing less income or no income at all while still being expected to pay their monthly payments such as rent, mortgage, car loan, credit card bills, and insurance. These financial obligations are especially devastating for people and businesses that were already having trouble making those monthly payments prior to the COV-19 outbreak.

If a person and/or business is experiencing financial trouble, has significant debt, and/or is subject to collection actions such as a foreclosure or a collections lawsuit, bankruptcy may be a potential remedy. One of the major benefits of filing for bankruptcy is the immediate automatic stay of collection actions and lawsuits.

The type of bankruptcy that may be appropriate for an individual and/or business depends on several factors. For more information on the different types of bankruptcies, check out our posts on Chapter 7, Chapter 11, and Chapter 13 bankruptcies.

Published on: April 13, 2020

Bankruptcy Considerations During the Coronavirus (COVID-19) Part 1: Chapter 11 Bankruptcy

by Robert Chewning, Esq.

The Coronavirus (COV-19) has had a negative impact on everyone physically, mentally, and financially. Businesses are no different. Small and medium sized businesses are especially vulnerable in these troubled times. They are faced with difficult decisions such as whether to temporarily lay off their employees or which bills to pay when little or no revenue is being received.

At McLaughlin & Nardi, LLC, we focus a portion of our practice on advising small and medium sized businesses when faced with these difficult financial decisions. When a business becomes overwhelmed and unable to meet its financial obligations, filing a Chapter 11 bankruptcy may be a great means to get the business back on track.

Published on: April 9, 2020

Bankruptcy Considerations During the Coronavirus (COV-19) Part 2: Chapter 13 Bankruptcy.

by Robert Chewning, Esq.

As a result of the Coronavirus (COV-19), the unemployment rate has increased rapidly and reports suggest that the unemployment rate may reach 30% in the country. This immediate loss of income for many individuals and families have left them unable to meet their continuing financial obligations such as paying for their mortgage, credit card bills, medical bills, etc.

If an individual or family is in a position where they are behind on their mortgage or other bills, filing a Chapter 13 bankruptcy may be good option for getting them back on track financially.

Published on: April 2, 2020

Bankruptcy Considerations During the Coronavirus (COV-19) Part 3: Chapter 7 Bankruptcy

by Robert Chewning, Esq.

Published on: April 2, 2020

New Jersey Provides Coronavirus Relief to Small Businesses

by Pauline M.K. Young

The Federal and State Government has set up avenues of relief to assist businesses in these hard times in the form of loans and grants. Below is rundown of the New

Jersey Economic Development Authority (NJEDA) Small Business Emergency Assistance Grant Program, through which New Jersey is offering Coronavirus relief to small businesses.

What is it?

Published on: April 1, 2020

McLaughlin & Nardi, LLC is Helping Small Businesses, Independent Contractors and Sole Proprietorships Obtain Financing Under the Federal Small Business Paycheck Protection Program

by Maurice W. McLaughlin

In this time of economic uncertainty due to the coronavirus and the social distancing required to slow it, our attorneys and staff are helping New Jersey sba-disaster businesses seek financing under the new Federal Small Business Paycheck Protection Program. The basic elements of the program are below. Call us to obtain help. Applications are being accepted starting April 3^rd, and funding is limited, so time is of the essence.

Small Business Paycheck Protection Program

The new Paycheck Protection Program by the Federal Government will provide small businesses with funds to meet payroll and benefits costs, payroll taxes, vacation and sick leave payments, rent, mortgage interest, and utilities for up to for up to eight weeks. If the funds are used solely for these expenses and the number of the business’s employees stays the same, the loan can be fully forgiven (it is expected that seventy five percent of the forgiven amount will go to payroll expenses). In other words, the loan is converted to a grant and does not need to be repaid. The requirement can be met by retaining employees or quickly rehiring them by June 30, 2020. If the number of full-time employees is reduced then the forgiveness will be reduced, and a pro rata portion of the loan will need to be repaid. Only one loan may be taken. The non-payroll costs need to have been incurred before February 15, 2020.