CARES Act Summary

Jordan Uditsky • March 28, 2020

On Wednesday, the Senate passed an historic $2 trillion economic stimulus package that is expected to come out of the House this weekend and be signed by the President. While much of the stimulus is providing support to big business and directly to taxpayers, there are also substantial benefits for small businesses. Called the “Paycheck Protection Program” (the “PPP”), it is part of the “The Coronavirus Aid, Relief, and Economic Security Act” (the “CARES Act”), because it’s meant to ensure that businesses have the funds to pay their employees and to prevent layoffs. Loans offered through the program may be forgiven under certain circumstances. However, employers will need to pay back the interest accrued, effectively making the principal a grant.


What is the purpose of PPP?

The PPP provides short-term cash flow assistance to small businesses to assist them and their employees with the economic impact of the COVID-19 pandemic. Funds under PPP will be made available during the period prior to June 30th by lenders certified by the SBA and guaranteed by the federal government.


Who is eligible for PPP?

Benefits under PPP are generally available to small businesses with 500 or fewer employees (full and part-time). Eligible small businesses also include sole-proprietors, independent contractors, and other self- employed individuals, including even “gig economy” workers. Note that the SBA publishes guidelines that may prohibit certain businesses larger than average in their industry, and you should consult your individual counsel to ensure compliance prior to applying.


What are the permitted uses of PPP funds?

Small businesses that receive loans under the PPP must use loan funds to pay payroll costs (i.e., salaries, wages, vacation, parental, family, medical, or sick leave, severance, retirement benefits, and state or local taxes assessed on compensation), costs related to group health care benefits (i.e., insurance premiums), employee commissions, interest on mortgage obligations, rent, utilities or interest on other debt, incurred prior to obtaining the loan. Note that loan funds under PPP may not be used by employers to pay salaries in excess of $100,000.


What are the terms of PPP loans?

Loans under PPP may be as large as 2.5 times a business’s average monthly payroll costs over the last 12 months, not to exceed $10 million. Salaries over $100,000 will not be included purposes of determining payroll costs. PPP loans have a maximum interest rate of 4% and may carry maturity dates up to 10 years. Eligible borrowers under PPP may also defer payment of non-forgivable principal and interest for at least 6 months but not more than a year. No collateral is required to be pledged and the normal personal guarantee requirement for SBA loans appears to be waived. Thus, the loan will be nonrecourse to the employer’s owners.


How will the PPP Loans be forgiven?

If the business uses the loan funds for the approved purposes and maintain the average size of its full-time workforce based on when it received the loan, the principal of the loan will be forgiven, meaning the company will only need to pay back the interest accrued. The loan forgiveness may be reduced pro-rata if the average number of full-time employees during the forgiveness period fails to satisfy the applicable requirements.


How should a business apply for a loan under PPP?

To apply for forgiveness, businesses must submit documentation regarding the eligible uses of loan funds, a certification that such documents are true and correct, as well the amount to be forgiven, and any other documentation the SBA deems necessary. The SBA will purchase any loan forgiveness amounts from its certified lenders and this canceled indebtedness will not result in taxable income to the business.



While further regulations are on the way, it is clear that the government is serious about getting help to small businesses in an expedited manner. Our team is keeping up to date on the developments and will be sure to advise you accordingly. Should you have any questions, don’t hesitate to call or email us.

Options for Addressing Title Encumbrances in Loan Transactions

By Jordan Uditsky • January 4, 2022
An amendment to the Mechanics Lien Act (the "Act') permits the bonding over of mechanic's liens in the State of Illinois. The bill was signed into law ( 770 ILCS 60/38.1 ) on July 28, 2015, and went into effect on January 1, 2016. This statute is significant because it allows parties to "clear title" to real property that would otherwise be subject to a mechanic's lien. An eligible applicant will be permitted to substitute a bond for the real property subject to the underlying mechanic's lien so that the lien attaches to the bond instead of the real property. Who is Eligible? To take advantage of 770 ILCS 60/38.1 , the party desiring to bond over the lien must be an eligible applicant. The statute defines applicant relatively broadly to include the following parties: An owner; Other lien claimant; A party that has an interest in the property subject to the lien claim; An association representing owners organized under any statute or to which the Common Interest Community Association Act applies; or Any person who may be liable for the payment of the lien claim, including an owner, former owner, association representing owners organized under any statute or to which the Common Interest Community Association Act applies, or the contractor or subcontractor. Process for Filing a Petition To effectively substitute the bond for the real property, the applicant must file a petition with the clerk of the circuit court in the county where the property subject to the underlying lien claim is located. The petition must include the following: The name and address of the applicant and the applicant's attorney, if any; The name and address of the lien claimant; If there is a pending action to enforce the claim, the name of the attorney of record, or if there is no pending claim, but the claim has been recorded, the name of the preparer of the lien claim; The name and address of the owner of record of any real estate subject to the claim or the name and address of the homeowners association or the condominium association; A legal description of the property; A copy of the lien claim; A copy of the proposed eligible surety bond; A certified copy of the surety's certificate of authority from the Department of Insurance or the state agency charged with the duty to issue the certificate; and An undertaking by the applicant to replace the bond with another eligible surety bond in the event that the proposed eligible surety bond ceases to be an eligible bond. After filing a proper petition, the applicant must provide notice and a copy of the petition, either by personal service or certified mail, to every party whose name and address is stated in the petition and the lien party's attorney of record. Jordan Uditsky, an accomplished businessman and seasoned attorney, combines his experience as a legal counselor and successful entrepreneur to advise business owners in the Chicago area.

On the Move: Legal Issues Affecting Motor Vehicle Manufacturer and Dealer Law

By Lou Chronowski • November 10, 2021
“Pandemic Impact? - New York Federal Court Allows Termination Dispute to Proceed” 

On the Move: The Future is Now!

By Lou Chronowski • October 19, 2021
Welcome to GHU’s newest blog – On the Move: The Future is Now! This blog focuses on legal and policy issues facing the vehicle industry. The future is now for the vehicle industry. Some states (CA and MA) have issued mandates requiring that vehicle manufacturers stop selling new ICE (internal combustion engine) vehicles by 2035. Most legacy vehicle manufacturers have made various announcements stating that their respective product portfolios will move from ICE to zero emission vehicles (EVs) over the next 10-14 years. Another significant issue facing the issue relates to how vehicles are purchased. Over the past several years, Tesla has charted a distribution model that rejects traditional dealerships and uses direct sales and service. Other EV manufacturers like Rivian and Lucid appear to be headed in a similar direction. It is well known that Apple and Amazon have plans to enter the vehicle space as well. Consumers will have a large role in determining how they want to purchase vehicles and vehicle services (much the same as they did with respect to on-demand transportation with the likes of Uber and Lyft). The question is whether traditional manufacturers will be kept on an uneven playing field with these newer market entrants. Finally, autonomous vehicles (AVs) are right around the corner as well. In addition to consumer adoption and acceptance of EVs, it is still unknown how consumers will react to AVs and whether AVs have a large role in America. The future is now. The changes in the industry are happening now and happening at fast pace. This blog will continue to explore issues facing the vehicle industry. For 20 years, Lou Chronowski has represented motor vehicle manufacturers helping them navigate complex laws and regulations and litigating disputes against dealers. If you have any questions, please contact Lou at lchronowski@ghulaw.com .
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