US Government’s Forgivable Loan Benefit – PPP




GTM Global’s US attorney, Tom Thorelli from THORELLI ASSOCIATES in Chicago, explains how the US Government is helping companies and individuals during this difficult time. The key benefit available is a forgivable loan under the Paycheck Protection Program. 

“We hope that you, your families, and employees are all doing well and are healthy during the uncertain times caused by the COVID-19 pandemic. The US government is offering assistance to companies and individuals during this difficult time. For companies, the key benefit available is a forgivable loan under the Paycheck Protection Program.

We have also been contacted with numerous COVID-19 legal issues related to contractual obligations, breach of contract, termination of employees, etc. Many businesses will not be able to fulfil contractual obligations due to COVID-19. Some businesses will be forced to temporarily suspend operations because State law requires it. How to do so without risking the future of the business must be addressed.

What follows are some legal issues related to the impacts of the COVID-19 pandemic and some answers to frequently asked questions. This is not legal advice. Each case is unique. Please speak with your lawyer or contact us for further information. Moreover, the government is frequently issuing new laws and regulations in response to COVID-19.”

Tom Thorelli

Tom Thorelli

Thorelli Associates

US government relief for COVID-19: File your application now in order to secure funding

Although the initial $350 billion-dollar funding has been used up, Congress has now approved additional funding of $310 billion for the PPP. We believe it is crucial to file your application immediately in order to secure funding, as funds will likely be allocated on a “first-come, first-serve” basis. What follows are a few additional facts related to the PPP.

The Paycheck Protection Program will grant loans of up to $10,000,000 at 1% interest, payable in two years, to cover eight weeks of salaries, benefits, utilities and rent. If certain easily complied with requirements are met, the loan will be forgiven (converted to a grant). Foreign-owned US companies can apply and are taking advantage of this Program, notwithstanding mechanical issues with banks. You should too. Please click here for further information, including the application. More on this, below.

Foreign-Owned US Businesses Are Eligible for The PPP Loan Program

  • At SBA: Small business = 500 employees or less;
  • PPP application form requires disclosure of all significant ownership;
  • If your business has corporate ownership with control, SBA affiliate rules kick in;
  • SBA Affiliate test counts the employees of the corporate owners in addition to the employees of the applicant to determine whether you have 500 employees or less;
  • For foreign owner affiliates, this will normally include the foreign owner’s employees worldwide;
  • But for PPP, an SBA Interim Final Rule provides a second option for counting employees of the applicant and its affiliates;
  • If combined, the US company and the foreign owner have less than 500 employees with a “principal place of residence” in the US, then the US company will qualify for PPP.
  • As of April 16, 2020, the first $350B in PPP funds had been committed.
  • Congress has now approved an additional $310B to replenish funding for the PPP.
  • Applicants need to be ready when the new application period opens.
  • Even if you were rejected before, the new SBA Interim Final Rule (which issued after the start of the first application period) clarifies the affiliate rule and should help you get approved.

CARES ACT – Government Assistance for US Small Businesses

Economic relief for individuals, independent contractors and small businesses has been rushed into operation. Application periods are now open for most types of financial assistance, including the following:

  • EIDL (Economic Injury Disaster Loan): $10,000 in grant money and up to $2M loan with few restrictions on what loan money can be used for. No requirement for personal guarantees when a loan is for less than $200,000.
  • PPP (Paycheck Protection Program): Up to $10M loan to cover 8 weeks of employee wages, benefits and other basic operation expenses. Fully forgivable (converted to a grant) if restrictions on the use of the loan funds are followed.
  • US small businesses can apply for either or both loan programs through participating banks and other financial institutions. Most applications can be completed online.
  • The application deadline is June 30, 2020, but qualifying businesses are advised to apply as soon as possible because to pool of available loan funds is capped. It has been widely reported that the government will allocate additional funds for these programs in upcoming legislation.
  • While there is a shortage of reliable guidance from the Treasury Department at this time, we believe that most foreign-owned US small businesses will be able to qualify for assistance in some form.

Families First Coronavirus Response Act (“Covid Act”) and its Paid/Unpaid Leave Benefits

  • The Covid Act applies to all employers with under 500 employees.
  • It allows an employee who is unable to work (or telework) to take 12 weeks of leave due to a need to care for the employee’s child (under 18 years of age) if the child’s elementary or secondary school or place of care has been closed, or the childcare provider is unavailable, due to COVID-19.
  • The first 2 weeks (10 business days) in which an employee takes leave may be unpaid. After 2 weeks of unpaid leave, an employer is required to provide paid leave at the rates provided for in the Covid Act for 10 weeks.
  • It also allows an employee 2 weeks of paid leave if the employee is unable to work (or telework) because:
  • The employee is subject to a Federal, State, or local quarantine or isolation order related to the coronavirus;
  • The employee has been advised by a health care provider to self-quarantine due to concerns related to the coronavirus;
  • The employee is experiencing symptoms of coronavirus and is seeking a medical diagnosis;
  • The employee is caring for an individual who is subject to a quarantine or isolation order or advised to self-quarantine by a health care provider;
  • The employee is caring for a child whose school or care provider is closed or unavailable due to coronavirus precautions; or,
  • The employee is experiencing any other condition substantially similar to the coronavirus, as specified by the U.S. Department of Health and Human Services (HHS).
  • The Covid Act does not require payment of unused Covid Act sick leave on termination of an employee.
  • An employer can still “furlough” (i.e. reduce wages/hours of employees) employees with certain limitations for “exempt” employees (i.e. certain classes of employees paid a salary over a threshold amount).
  • Whether an employer can terminate an employee will first depend on the terms of the written or oral employment agreement. Check your employment agreement for terms like:
  • “At will”. This term means either the employer or employee may terminate the employment relationship at any time and for any (non-discriminatory) reason or no reason at all.
  • “Notice”. Some employment agreements call for the employer to provide advance written notice of termination.
  • There are certain employee job protections in the event that an employee takes leave under the Covid Act.
  • Generally, eligible employees who take leave under the Covid Act are entitled to be restored to the position they held when the leave commenced or to obtain an equivalent position with their employer. There is an exception for employers with fewer than 25 employees.
  • It is unlawful to discharge, discipline, or in any manner discriminate against an employee for taking leave or for filing a complaint, instituting suit, or testifying in a proceeding under or related to the Covid Act.
  • Generally, so long as the employer terminates the employee for a non-discriminatory reason (e.g. not because the employee takes leave under the Covid Act, or because they are a member of a protected class like race, gender, age, religion, etc.) then the employer may terminate the employee.

Additional COVID-19 Orders and Other Relief Enacted by Individual States

Executive Orders have been issued by the governments of each individual state. Companies that maintain offices, warehouses or staff in different states can expect that different forms of assistance and relief may be available to the corporate citizens of each state. For example, in many states, the normal deadlines for annual filings, renewal of licenses and other certification programs have been extended and payment deadlines have been deferred. A comprehensive list of all COVID-19 related orders by the state can be found here. We can work with you on the implications of these new orders for your business.

COVID-19 Contractual Issues: FORCE MAJEURE – The Law of Unexpected Circumstances

National and International authorities have made formal declarations that the coronavirus is a pandemic and have created significant constraints on trade. In many cases, this will be enough to invoke the standard force majeure provision.

Our Quick Guide to Make Force Majeure Work for You

  • A force majeure clause will protect you, but only if it has been worded properly.
  • Sellers of goods and services are more likely to benefit than buyers of goods and services.
  • Connecting the force majeure cause and effect with documentation will be critical.
  • For Sellers: focus on workforce disruption and defects in the supply chain.
  • For Buyers: focus on contract requirements for delivery and other payment preconditions.
  • For Buyers and Sellers: Now is the time to prepare and send a force majeure notice letter.
  • No force majeure clause in your contract? Other affirmative defences such as the doctrine of commercial frustration or the impossibility of performance may modify or rescind a contract in whole or in part.

If you have further questions or concerns you would like to discuss related to Covid-19, we are happy to discuss these issues with you and provide you with guidance on legal compliance and best practices.

As mentioned above, none of what is provided herein is to be viewed as legal advice.

Finally, we hope that you are healthy, along with your family, and that your spirits remain high for the future that lies ahead.

We are in this together!
Thorelli & Associates

Watch Tom Thorelli streaming live from Chicago at our US Legal and Economic Intervention. A Video Briefing for UK Businesses.

Chaired by GTM Global’s Mark Stimpfig, we heard from Tom Thorelli, US accountant Antoine Guillaud and DIT International Trade Adviser Laurie Spicer who provide advice and guidance on key issues such as US employee management, conserving cash dollars, Force Majeure and related contractual obligations.


Mark Stimpfig
Mark Stimpfig
Mark Stimpfig co-founded GTM Global in 2015, having previously run national and international marketing programmes for clients like Sony, Dixons / PC World, Safeway and Reuters. Mark was also until recently, the London Development Director for Greater Phoenix Economic Council, the leading Economic Development Agency in North America in 2021/2022.