PPP Loans: To Take or Not To Take?

Many small businesses are struggling right now. And PPP loans may offer some much-needed relief under the circumstances. But how do you know if it is a good idea to accept the loan for your company? Unfortunately, the only answer is “it depends.” There is no one-size-fits-all response because each company—and the effect of COVID-19 on each company’s business—is different. However, SBA’s recent guidance has provided a few crucial considerations for making this decision.

Continue reading…

SmallGovCon Week In Review: May 11 – May 15, 2020

This week on the blog we continued to bring you coverage of COVID-19 related issues, including some timely updates on SBA’s extension of the deadline to return funds under the Paycheck Protection Program.

But there was much more federal contracting news this week, including articles about a fill-in for the 8(a) STARS II vehicle, restructuring of government IT procurement units, and a proposed new COVID-19 relief bill that could help federal contractors.

Continue reading…

UPDATE: Too Little, Too Late? SBA Updates Guidance on PPP Safe Harbor the Day Before May 14 Deadline

**UPDATE 5/14/20: Since publication of this post, the SBA has now updated the PPP Safe Harbor deadline to May 18. This post has been updated to include this additional information.

Just hours before the first extended May 14 deadline for businesses to return “unnecessary” Paycheck Protection Program loans without penalties, the SBA has published new guidance on how it will review borrowers’ required good-faith certifications.

Continue reading…

SBA OHA confirms 3-year look-back period for economic dependence affiliation

Under the SBA’s regulations, affiliation between two companies might exist where one company derives 70% or more of its receipts from the other over the preceding three fiscal years. See 13 C.F.R. § 121.103(f)(2).

This economic dependence affiliation, as it is called, can be tricky to identify in practice—it is, after all, a rebuttable presumption of affiliation. That is, a company might be able to demonstrate that economic dependence doesn’t exist if, for example, it has only been in business for a limited amount of time and has only been awarded a limited number of contracts.

Recently, the SBA’s Office of Hearings and Appeals considered the bounds of the economic dependence affiliation rule and interpreted the three-year look-back period.

Continue reading…