Page 26 - Bulletin Vol 25 No 3 - Sept-Dec 2020 - Final

Article | Legal continued

FAQs for PPP Forgiveness

Beginning in August 2020, the buy sell market has taken off. Similar to the exodus from NYC and
slammed residential real estate brokers, deal attorneys, such as our firm, are overrun with sellers looking
to transition and buyers interested in opportunities. The demand in the market has wiped out any discount
buyers were hoping to see and prices for practices are at pre-Covid levels for the most part. Navigating
PPP as a closing issue raises concerns for buyers and sellers and new guidance has made clear while the
PPP should not be a barrier, the lender may be a nuisance. In recent deals we are seeing escrow as a
required step for some lenders, even being as bold as requiring a buyer unrelated to the seller/borrower
PPP loan to take part in an escrow process. Unfortunately, navigating bank consent is a standard issue in
transition for deals and will likely remain for the immediate future until forgiveness is achieved for many
more practices over the next 6 months. If you are considering a transition, to make your life easier, apply
for forgiveness in advance – do not wait.
Q: Will SBA review individual PPP loan files? Q: Yes. To further ensure PPP loans are limited to eligible
borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will
review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s
submission of the borrower’s loan forgiveness application. Additional guidance implementing this
procedure will be forthcoming.
Q: To determine borrower eligibility under the 500-employee or other applicable threshold established by
the CARES Act, must a borrower count all employees or only full-time equivalent employees? A: For
purposes of loan eligibility, the CARES Act defines the term employee to include “individuals employed on
a full-time, part-time, or other basis.” A borrower must therefore calculate the total number of employees,
including part-time employees, when determining their employee headcount for purposes of the eligibility
threshold. For example, if a borrower has 200 full-time employees and 50 part-time employees each
working 10 hours per week, the borrower has a total of 250 employees. By contrast, for purposes of loan
forgiveness, the CARES Act uses the standard of “fulltime equivalent employees” to determine the extent
to which the loan forgiveness amount will be reduced in the event of workforce reductions.
In placing the above 2 FAQs together, I wish to highlight that there is no supplement for preparation. Any
borrower may be audited. FTE calculation, similar to utilizing the correct “covered period”, whether you
utilize the 8-week period or 24-week period, is an easy area to miscalculate. Be mindful of the
requirements in determining application and forgiveness; document carefully as set for the above where an
individual has not returned and disclose where necessary when FTE are not met for forgiveness
purposes. A potential repayment obligation now, at the stage of forgiveness, is much preferred to potential
audit exposure in the future.
We expect you are working directly with your accountant on the PPP forgiveness process, or, your
bookkeeper. Good. Be careful when you complete your application and be truthful and cognizant of
supporting documentation in all answers. Be prepared for an audit in the future. Keep a record of any
materials submitted to your lender. Ask questions to your accountant and attorney when you have
them. Let’s make sure once you are forgiven, unless another round of stimulus is issued, you have no
further exposure or concern regarding the loan amounts or expenditures.

The information contained herein are answers to hypotheticals and do not constitute legal advice. For
legal advice on your re-open and other matters relating to your practice, contact Jennifer directly at
Jennifer@kirschenbaumesq.com or at (516) 747-6700 x. 302.

Jennifer Kirschenbaum, Esq., serves as counsel to NCDS, and is the managing partner of
K&K’s healthcare department. Jennifer and her team dedicate their practice towards assisting
dentists and DSOs in day to day legal operational matters, such as purchases, sales,
employment matters, partnership and corporate agreements, licensure defense, payor issues
and vendor relations.
26 | Nassau County Dental Society ⬧ www.nassaudental.org