We've just sent our third client alert on COVID-19 resources focusing on the latest PPP Loan updates as of the date of our alert.. Check it out here.
For our Chicago-area and Illinois-based clients, here is some updated information on local resources:
We continue to get a lot of questions related to force majeure provisions in contracts and whether a party could be excused from performance due to the Coronavirus. Usually, someone is required to pay under a contract and they want to avoid or reduce payment and hope a force majeure provision would allow them to do so. Unfortunately, that is unlikely to be the case. First of all, to see whether your contract has a force majeure provision, look for a clause with that exact title towards the end of the applicable contract -- this provision will typically discuss how performance may be excused for acts of God, natural disasters, etc. Many contracts have these provisions and many do not (they are pretty uniform in sophisticated, well-drafted agreements but not everyone is dealing with sophisticated, well-drafted agreements). If your agreement has a force majeure clause, one of two things related to payment is typically the case -- either: (1) it is silent on payment or (2) it says that payment obligations are not subject to the force majeure provisions. Either way, payment typically is not excused no matter what happens out there in the world. For force majeure to apply, a party's performance under the contract must be impossible and payment obligations are basically never considered impossible. If, however, (i) your company is subject to a requirement under a contract other than a payment obligation, (ii) the contract has a force majeure clause, and (iii) the Coronavirus environment has made it extremely difficult or impossible for you to perform, then you are getting into the sweet spot for a force majeure clause. For instance, a contract requires your company to produce 10,000 widgets by April 1st, your company is required to shut down due to local shelter in place orders, you did not unreasonably delay production before the shelter in place order and now there is no way you'll meet the deadline. In that case, force majeure would very likely excuse performance. Let us know if we can help you evaluate any relevant contracts and, considering we don't know how long the impacts of Coronavirus will last, it is a good idea to keep these provisions in mind for all new contracts for the next year.
Now that the federal government has announced social distancing guidelines that extend though April, other federal agencies are revising guidelines. Most courts have provided some level of deadline extensions and have extended, or likely soon will extend, those deadlines further. For example, the federal district court in Chicago (NDIL) recently extended most deadlines in civil cases from an original 21 days to an additional 28 days, for a total of 49 days from original deadlines. County court in Chicago (Cook County) delayed most cases for 30 days on March 14th and has yet to, but likely will, further extend that deadline into May.
While most of the inquiries we have received focus on the SBA programs, which we will continue to write about here and in our client alerts, businesses should also be aware of and consider local resources. In the cities and states were this firm maintains offices, for example, there are municipal and statewide resources a business could pursue, such as Atlanta's small business emergency fund, Chicago's $100M small business resiliency loan fund and Michigan's $10M small business relief program. Many states and most major cities will likely institute some local assistance programs for small businesses. For more information on local programs, you should look into local chambers of commerce, governor's office websites or city websites. Any local small business assistance organizations are likely to be well-suited to help you figure out what programs you are best suited for and typically being approved for one program would not disqualify you from eligibility at another program (for instance, there is no reason to believe that the SBA programs could not be in addition to local programs -- pursuing local programs should not hurt your chances with the SBA).
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is now officially law after the President signed the legislation this afternoon. We will provide further updates soon that we feel are of particular relevance to our clients. The Act provides significant changes related to SBA loans, healthcare, workers, and other areas.
Author: Amy Kabaria
The federal government has issued waivers and has indicated it will be exercising enforcement discretion with regard to certain requirements and penalties in order to help companies provide telemedicine services during this public health emergency. Various states have also enacted changes such as the Illinois Governor's recent executive order significantly relaxing rules surrounding telemedicine. The laws and regulations on a state by state basis are very much in flux at the moment and do not always exude clarity but the general theme is that telemedicine is being encouraged and prior roadblocks are being removed or at least reduced for now.
1. HIPAA Flexibility: Health care providers may use popular applications through their personal phones and computers to provide real-time audio-visual telemedicine services at this time. While previously a doctor could only use limited, HIPAA compliant applications (such as Zoom), those rules have been relaxed for now and telemedicine may be provided by FaceTime, Facebook Messenger video chat, Google Hangouts, Skype, etc. However, "public-facing" apps such as Facebook Live should not be used. Any options for encryption should be enabled. So long as providers are acting in good faith, the HHS Office will waive penalties for HIPAA violations.
2. Medicare Telehealth Services Billing: Practitioners may provide Medicare telehealth services to beneficiaries at the same amount as in-person visits. To broaden access to services, CMS has announced the following policy changes with regard to real-time audio-visual telehealth visits and without regard to treatment or diagnosis type:
4. Prescriptions: The DEA is permitting practitioners to issue prescriptions for controlled substances through real-time audio-visual interactive telemedicine communication with patients for whom they haven't conducted an in-person medical evaluation, as long as the practitioner is acting in accordance with applicable federal and state laws and the prescription is for a legitimate medical purpose by a practitioner acting in the usual course of his/her practice.
Please contact Amy Kabaria if you have any questions or concerns on these areas or wish to further understand particular state-specific provisions (click here to to email Amy).
In connection with the newly enacted FFCRA (discussed in a prior blog post), the U.S. Department of Labor has issued a new poster required to be posted and displayed by all private companies with fewer than 500 employees. You can download the poster here and view the FAQ released by the DOL here. Please contact us if you have any questions or concerns.
Pursuant to IRS Notice 2020-18 all federal tax returns are now extended 3 months to July 15th. All prior limits on deferrals (established by IRS Notice 2020-17) have been removed. Not all states have deferred their filing or payment deadlines but this is changing daily. Currently the states that HAVE enacted income tax filing extensions through at least July 15th include: AK, AL, AZ, CA, CO, CT, DE, DC, GA, HI, ID, IL, IN, IA, KS, KY, LA, MD, MN, MO, MT, NC, ND, NE, NM, NY, OK, OR, PA, RI, SC, UT, VT, WI. Virginia has extended only until June 1st and Mississippi until only May 15th. Eventually, most or all states may move to July 15th or later to match the federal deadline.
Trademark response deadlines generally remain in force. The USPTO has issued an advisory that applicants or owners who were unable to respond to certain trademark deadlines “as a result of the effects of the coronavirus outbreak” may petition to revive their applications or registrations. However, it is currently unclear whether the USPTO will freely grant relief to all petitioners, so we highly encourage compliance with all pending USPTO deadlines to avoid the risk of losing any trademarks rights. Please contact us our Trademark and Branding Attorney, Perry Gattegno, if we can assist you with any outstanding trademark deadlines.
The USPTO has also made other accommodations related to COVID, including waiving the requirement for certain signatures to be originals, clarifying that this pandemic qualifies as an "extraordinary situation" and scheduling previously in person interviews, hearings and meetings now via video or telephone. We expect continued announcements which are updated in real time here.
Many businesses are currently seeking SBA disaster loan assistance. The SBA Disaster Loan program for COVID-19 is administered and serviced directly by the SBA (unlike other SBA loan programs) through an online portal here. Currently the SBA Disaster Loan Assistance Portal is down for maintenance through at least close of business today, 3/25.
The SBA has issued a fact sheet on the assistance program available here (but this is also down for maintenance currently).
Certain local SBA offices are also providing additional resources. For those in the Chicago area, the local SBA office is providing webinars through eventbrite. Check out currently scheduled events here. These do appear to quickly fill up and as I write this only a bilingual program on Friday, 3/27 still has openings. All the webinars are of course free.
This does not mean that other SBA loans are not still available and those existing programs may be a good option to consider for some companies. For example, if you own and occupy your company's real estate and have a non-SBA mortgage on the property currently, you might want to look into an SBA 504 refinance option for your current mortgage. The 504 loan can also be a good option for businesses with large pieces of machinery and equipment or looking to buy or replace such equipment. The current rate for a 504 refi is 2.8% fixed for 20 years.
The most common SBA program, the 7a loan, also remains an option for up to $5 million and small loans can have rates as low as prime plus 2.75%. Borrowers will be required to provide a personal guaranty at least half of the loan.
SBA 504 and 7a loans are administered and serviced through private lenders and many banks have SBA programs. One such lender is Somercor and their website and newsletter offers a wealth of resources. Please contact me if you would like a direct into to an SBA lender for a 504 or 7a loan, or check out the SBA portal when it reopens hopefully this evening.
NOT LEGAL ADVICE
Please be advised that we have provided the information contained here as a courtesy and while we have sought to be as current and accurate as possible we do not represent the accuracy of anything contained here. Nothing contained here should be considered legal advice.