Author: Paul J. St. Onge

American Rescue Plan of 2021 Expands Paycheck Protection Program to Additional Nonprofit Entities

President Biden recently signed the $1.9 trillion American Rescue Plan Act of 2021, H.R. 1319 (the “Act”) into law on March 11, 2021. The Act will send aid to millions of Americans still recovering from the global COVID-19 pandemic. The Act modifies certain provisions of the Paycheck Protection Program (“PPP Program”) in a number of ways, including, but not limited to, expanding the eligibility of certain nonprofits to participate in the PPP Program. Section 5001 (Modifications to Paycheck Protection Program) of the Act amends the PPP Program as follows: 1. Section 5001(a)(1) of the Act expands the eligibility of nonprofits to include a new category termed “additional covered nonprofit entity” – which are nonprofits listed in Section 501(c) of the Internal Revenue Code other than 501(c)(3)s, 501(c)(4)s, 501(c)(6)s, or 501(c)(19)s – to receive an initial PPP Program, provided that: The organization does not receive more than 15 percent of receipts from lobbying activities; The lobbying activities do not comprise more than 15 percent of activities; The cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to February 15, 2020; and The organization employs not more than 300 employees. In addition: Larger nonprofits are now eligible for the PPP Program by striking the application...

Governor Murphy Signs New Economic Incentive Legislation

Governor Murphy signed into law the New Jersey Economic Recovery Act of 2020 (NJERA), opening a new chapter in the Murphy Administration’s efforts to incentivize businesses to invest in New Jersey and to assist the State in recovering from the economic downturn caused by COVID-19. NJERA’s enabling legislation, almost 250 pages long, creates new economic development programs, amends existing programs, and makes operational changes to the New Jersey Economic Development Authority (EDA). New Incentive Programs NJERA 2020 creates nine new incentive programs: The Historic Property Reinvestment Program provides tax credits for part of the cost of rehabilitating historic properties in this State. Tax credits under this program are capped at $50 million annually for six years. Qualified historic properties potentially eligible for tax credits include those designated on the National Register of Historic Places or the New Jersey Register of Historic Places, by the Pinelands Commission, or by municipalities under certain criteria approved by the State Historic Preservation Officer. The Brownfields Redevelopment Incentive Program provides tax credits to compensate developers for remediation costs of redevelopment projects located on brownfield sites. Tax credits under this program are capped at $50 million annually for six years. Brownfield sites include any former or current commercial or industrial site that is currently vacant or underutilized and on which there...

Significant Changes Coming To the Paycheck Protection Program

As of 6/3/20, over $100 billion in PPP funding was still available from SBA authorized participating lenders. Today, President Trump signed HR7010, the Paycheck Protection Program Flexibility Act of 2020. The bill changes specific loan forgiveness provisions of the Paycheck Protection Program (PPP). PPP was a part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed by Congress to mitigate the effects of COVID-19. Companies or organizations who secured PPP loans are cautioned and advised to review the new legislation very carefully, as detailed below. Under PPP, eligible businesses could apply for forgivable loans of 2.5 times their average monthly payroll or $10 million, whichever is the lesser amount. A recipient can have 100 percent of its PPP loan forgiven if it uses the proceeds of the loan on the following items during the eight weeks beginning on the date of loan origination: Payroll costs as defined by the CARES Act; Any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation); Any payment on any covered rent obligation; and Any covered utility payment. Loan recipients were also required to spend at least 75 percent of the loan proceeds on payroll costs. The new law contains the following...

UPDATE: Federal Reserve Board Expands Main Street Lending Program

After receiving extensive public comment during the past month, the Federal Reserve announced on April 30, 2020 that it will expand the scope and eligibility of its Main Street Lending Program (“Program”). The Federal Reserve’s recent action follows the unprecedented steps taken by the Board of Governors of the Federal Reserve on April 9, 2020, to provide up to $2.3 trillion in credit facilities to households, employers, and state and local governments in response to the COVID-19 emergency’s impact on the U.S. economy. Gibbons previously covered these newly announced programs in a client alert. The Program facilitates lending to small and medium sized businesses. The Federal Reserve received 2,200 submissions relating to the Program, and on April 30, 2020 issued two updated Term Sheets and an initial Term Sheet, which are summarized as follows: The Program comprises the Main Street New Loan Facility (MSNLF), the Main Street Expanded Loan Facility (MSELF), and the new Main Street Priority Loan Facility (MSPLF). Below is a side-by-side comparison chart and additional details about the Program. Program Loan Options MSNLF MSPLF MSELF Term 4 years 4 years 4 years Minimum Loan Size $500,000 $500,000 $10,000,000 Maximum Loan Size Lesser of $25M or 4x 2019 adjusted EBITDA Lesser of $25M or 6x 2019 adjusted EBITDA Lesser of $200M, 35% of...

COVID-19: Federal Reserve Announces $2.3 Trillion in Loans

On April 9, 2020, acting with the approval and consent of the Secretary of the U.S. Treasury, the Federal Reserve took unprecedented additional action using its statutory emergency lending powers to provide immediate support to the national economy. In so doing, the Board of Governors of the Federal Reserve adopted a series of measures that will provide up to $2.3 trillion in credit facilities and loans to households, employers, and state and local governments, consistent with the Federal Reserve’s emergency lending powers under Section 13(3) of the Federal Reserve Act (12 U.S.C. 343(3)). In particular, the Federal Reserve will adopt or expand on the following programs: Main Street New Loan Facility (MSNLF) and Expanded Loan Facility (MSELF): The Federal Reserve will purchase up to $600 billion in loans, and the Department of Treasury, through Section 4027 of the Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”), will make a $75 billion equity investment in a single common special purpose vehicle (SPV) in connection with the MSNLF and MSELF, both of which are designed to facilitate lending to small and medium sized businesses by eligible lenders (i.e., US insured depository institutions, US bank holding companies, and US savings and loan holding companies). The MSELF will provide four-year loans to companies employing up to 10,000 workers...

Update: U.S. Treasury Approves New Jersey’s Opportunity Zones

As we had previously written, the Murphy Administration recently recommended 169 census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. The Treasury Department has now approved Governor Murphy’s recommendations. A list of the Opportunity Zones and an interactive map showing the Zones can be found through the New Jersey Department of Community Affairs. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for the purpose of investing in Opportunity Zone Property. Eligible Opportunity Zone Property generally includes (i)...

New Jersey Picks Its Opportunity Zones

The Murphy Administration announced it has recommended census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for the purpose of investing in Opportunity Zone Property. Eligible Opportunity Zone Property generally includes (i) stock in a domestic corporation; (ii) any capital or profits interest in a domestic partnership; and (iii) tangible property used in a trade or business of the Opportunity Fund that substantially improves the property. The Program is designed...

NJEDA Proposes Readoption and Changes to Administrative Rules

Notwithstanding recent headlines about attempts to “kill” off the New Jersey Economic Development Authority (NJEDA), reports of the NJEDA’s death are greatly exaggerated. On November 20, 2017, the NJEDA proposed for readoption with amendments the administrative rules for its assistance programs. This includes changes to the Grow NJ Assistance Program (the “Grow NJ Program”) that implement the recently enacted law creating incentive areas around colleges and universities; modifications to the submission dates for the Economic Redevelopment and Growth Program (the “ERG Program”); and revisions to the Angel Investor Tax Credit Program (the “Angel Investor Program”). Interested parties may submit written comments by January 19, 2018. The NJEDA is an independent State agency that finances small and mid-sized businesses, administers tax incentives to retain and grow jobs, revitalizes communities through redevelopment initiatives and supports entrepreneurial development by providing access to training and mentoring programs. We have previously written about some of the NJEDA’s programs, and the most important proposed changes to the NJEDA’s program rules are listed below. Grow NJ Grow NJ encourages economic development and job creation by offering tax credits to businesses looking to relocate to the State, or that are currently located in New Jersey but are in danger of leaving. The NJEDA’s proposed changes to the Grow NJ program rules would: Implement new incentive...

Are New Jersey’s Business Loan, Incentive, and Grant Programs Right for You?

Ronald Reagan famously said that the nine most terrifying words in the English language are, “I’m from the government and I’m here to help.” But for businesses starting up, expanding, or relocating into New Jersey, state government can be helpful, if you know where to start. We regularly counsel clients on government incentives, loans, and business assistance offered through the nationally-recognized New Jersey Economic Development Authority (NJEDA) and other State agencies. The NJEDA’s programs assist businesses of all sizes access loans/loan guarantees, as well as business and tax incentives. A few of the many programs offered are listed below. Loan Programs The NJEDA offers several loan programs that support small and mid-sized companies acquiring fixed assets, obtaining working capital, and refinancing debt: The Premier Lender Program provides loan and line of credit participations/guarantees in varying amounts. The NJEDA has a group of preferred lenders, and rates are generally at or below traditional loans. In return for the NJEDA’s assistance, the business has to agree to add one new full-time employee for every $65,000 of NJEDA exposure. The Small Business Fund provides up to $500,000 for small businesses, minority or woman owned businesses, and nonprofits that have been in business for at least one to three years. The Direct Loan Program provides up to $2 million...

Governor Christie Acts on BEIP Conversion Tax Credit Payment Changes

On June 30, 2016, Governor Christie signed to law Senate Bill 2376/Assembly Bill 4002, which modifies the tax credit payment schedule for Business Employment Incentive Program (“BEIP”) Grant recipients converting their cash grants to tax credits. The Legislature and Governor enacted a law in January allowing businesses to convert outstanding BEIP Grants into tax credits. The law provided that BEIP Grants accrued but not paid during years 2008-2013 were to be redeemable as tax credits over a five-year period starting in the 2017 tax accounting or privilege period of the business. S-2376/A-4002 revises the tax payment credit schedule so that only 5 percent of the tax credit is redeemable in 2017. Twenty percent would be redeemable in 2018, with 25 percent redeemable in years 2019, 2020, and 2021. The change was required due to the projected budgetary shortfall in Fiscal Year 2017, which the State Treasurer announced on May 18, 2016. If your business is still considering a BEIP conversion, the deadline to opt-in is the close of business on July 11, 2016. Gibbons can assist your company with the process of evaluating and implementing a conversion.