VIEWPOINT: SBA’s troubling new requirements for PPP borrowers of more than $2 million

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The U.S. Small Business Administration (SBA) has circulated Paycheck Protection Program (PPP) loan-necessity questionnaire forms that it intends to require borrowers with PPP loans in excess of $2 million to complete. It is expected that nonprofit-entity borrowers will be required to complete Form 3510 (https://www.bsk.com/uploads/SBA-Form-3510.pdf) and for-profit entity borrowers will have to complete Form 3509 (https://www.bsk.com/uploads/Form-3509.pdf). These troubling new questionnaires specifically require borrowers to disclose information regarding their operations and liquidity during their covered periods.

The SBA asserts that the purpose of the questionnaires is to assist with the “review of your good-faith certification that economic uncertainty made your loan request necessary to support your ongoing operations.” However, some of the additional information aims to evaluate the borrower’s business during the pandemic in hindsight and rather than at the time of the PPP application. It appears that the SBA may determine that borrowers did not satisfy the good-faith certification as to the loan’s necessity in situations where their business ended up not being as negatively impacted by the economic effects of the pandemic as anticipated at the time of their application. This is a concerning development for many PPP borrowers and the consequences can range from a denial of the loan-forgiveness application to criminal prosecution.

Recall that in the PPP application, borrowers were required to make the following need certification: “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Regardless of the SBA’s stated purpose for the new questionnaires, the requirement to complete these new questionnaires and the information that the SBA is seeking from borrowers contained therein is seemingly a departure from the SBA’s previous position that the need-based certification is evaluated at the time of the application.

You may also recall that this same necessity certification was the subject of much controversy and ultimately resulted in a safe-harbor period to return PPP funds back in May. Borrowers with loans under $2 million were automatically deemed to have made this certification in good faith. Borrowers with loans exceeding that amount were allowed to return their PPP funds before the safe-harbor date if they determined that they were ineligible for the loan based on additional guidance regarding the interpretation of this certification. That additional guidance clearly indicated that when making the necessity certification, borrowers should consider their “current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” While the new questionnaires contain questions clearly aimed at business activities and liquidity, many of the questions ask what actually happened to the borrower’s business and liquidity, not what was anticipated or uncertain at the time of the application.

Specifically, Form 3510 (for nonprofit entities) asks borrowers questions regarding their business activities, such as: (1) their gross receipts and expenses from certain quarters in 2019 and 2020; (2) if the borrower was subject to a state or local shutdown order or was forced to alter its operations; (3) if the borrower voluntarily ceased or reduced operations; and (4) if the borrower recently undertook any capital improvement projects. Form 3510 also asks nonprofit entities questions regarding the borrowers’ liquidity, such as: (1) how much the borrower had at the time of the application in cash, savings, and cash investments; (2) how much debt the borrower had prepaid during the covered period; (3) if the borrower paid any employees salaries of $250,000; (4) if the borrower is restricted from using funds in certain ways; (5) information regarding the borrower’s endowments; (6) information regarding the borrower’s non-cash investments; and (7) if the borrower received funds from any other CARES Act program.

Additionally, universities and colleges are required to provide tuition information and information regarding decreases in revenue. Health-care providers are required to provide information regarding their program-service revenue as well.

Form 3509 (affecting for-profit entities) seeks similar information from for-profit borrowers. Form 3509 asks borrowers questions regarding their operations, which include: (1) gross revenues in certain quarters of 2019 and 2020; (2) if the borrower was subject to state or local shutdown orders, was forced to significantly alter its operations due to compliance with those orders, and other information regarding those orders; and (3) if the borrower voluntarily ceased or reduced operations and why. The form also asks for-profit entities questions regarding the borrowers’ liquidity, which include: (1) how much the borrower had at the time of the application in cash and cash equivalents; (2) how much the business paid its owners in dividends during the covered period; (3) how much debt the borrower had prepaid during the covered period; (4) if the company paid any employees or owners compensation in excess of $250,000; (5) if the borrower’s equity securities are listed on the national securities exchange; (6) if any owner is publicly traded or a private-equity firm; (7) the book value of the business; (8) information regarding the parent company of a borrower if it is a subsidiary; and (9) if the borrower received funds from any other CARES Act program.

Not surprisingly, the borrower will need to make new certifications regarding the accuracy of the information disclosed in the questionnaire and the authorization to sign the questionnaire. There is also an acknowledgment regarding prosecution pursuant to federal law for making false statements to obtain a PPP loan or obtain forgiveness of a PPP loan. The completed questionnaire form, along with supporting documentation, is due to the lender servicing the borrower’s PPP loan within 10 business days of borrower’s receipt of the questionnaire from its lender.

As a reminder, there is still the opportunity to return monies during the SBA review period if the necessity of the loan is questioned. According to SBA FAQ 46, if the SBA in the course of its review determines that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, the SBA will not pursue administrative enforcement or referrals to other agencies, as long as the borrower repays the loan after receiving notification.

Kate Chmielowiec and Elizabeth L. Lehmann are associate attorneys in the Syracuse office of Bond, Schoeneck & King PLLC. Contact them at kchmielowiec@bsk.com and elehmann@bsk.com, respectively. Jeffrey B. Scheer is a member (partner) in the law firm. Contact him at jscheer@bsk.com

Innovation/Entrepreneur Resource Directory

Small Business, Subscriber Only

Welcome to the 2020 Innovation & Entrepreneur Resource Directory. The following organizations foster innovation and provide funding, consultation, training, information, and other support to entrepreneurs across Central New York. CASE at Syracuse University 2-212 Center of Science & Technology Syracuse, NY 13244 - Phone: (315) 443-1060 - Website: case.syr.edu - Year established: 1984 - Organization type: incubator, funding source

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Arvantides takes over as Mohawk Valley SBDC director

Regional News, Small Business, Subscriber Only

UTICA, N.Y. — Paul Arvantides is settling into his new role as director of the Mohawk Valley Small Business Development Center (SBDC), having started in the top job on Nov. 9. The Mohawk Valley SBDC operates in the Mohawk Valley Community College (MVCC) thINCubator at 326 Broad St. in downtown Utica. MVCC’s thINCubator provides programming

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UTICA, N.Y. — Paul Arvantides is settling into his new role as director of the Mohawk Valley Small Business Development Center (SBDC), having started in the top job on Nov. 9.

The Mohawk Valley SBDC operates in the Mohawk Valley Community College (MVCC) thINCubator at 326 Broad St. in downtown Utica. MVCC’s thINCubator provides programming to support local entrepreneurship efforts from interest to acceleration, per its website.

Arvantides is succeeding previous director Roxanne Mutchler, who retired after 11 years with the Mohawk Valley SBDC. In those years, Mutchler worked in capacities that included New York SBDC government-contracting coordinator and acting director.

As director, Arvantides will oversee the Mohawk Valley SBDC, which provides free one-on-one counseling and training to support local small-business enterprises.

Arvantides has been a business advisor with the Mohawk Valley SBDC since 2017. During that time, he has provided business-advisory services to a variety of small businesses and entrepreneurs working toward starting, managing, growing, or purchasing a business.

Before the SBDC, Arvantides was a business manager at Northwestern Mutual; served as VP and head of U.S. services at E4E Healthcare Services LLC in Towson, Maryland; and was the president and owner of Medical Coding Services, Inc. in Baldwinsville.

SBDC recent activity

The Mohawk Valley SBDC has been helping area small businesses deal with the effects of the COVID-19 pandemic, including a decline in revenue, the economic shutdown, and a lack of customers, says Arvantides, who spoke with CNYBJ on Nov. 16.

The office’s “primary” focus has been helping small businesses with the U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP).

It has been concentrating on “really helping business owners navigate the application process and the uses of those funds to help sustain their business and survive in what has been a very difficult time for small businesses,” says Arvantides.

The small-business clients that the Mohawk Valley SBDC has been working with since the spring are “trying to reinvent themselves a little bit,” he notes.

For example, clients have wondered how restaurants move to online ordering and takeout services or how do businesses sell online when they weren’t used to selling online in the past.

“They’re trying to hold on until we can get through this period and trying to come up with creative ways to do that,” says Arvantides.

As the pandemic has continued, the Mohawk Valley SBDC employees have been working remotely much of the time.

Before adjusting to this crisis, the SBDC met with clients face-to-face. But over the last several months, the SBDC has learned that working in a remote environment can be “efficient and productive” to both the organization and its clients.

“We can get on a Zoom meeting … and get a lot accomplished in a short amount of time without the client having to take so much time out or their day to drive to our center or to drive to one of our satellite offices and meet directly one-on-one with an advisor,” says Arvantides.

The Mohawk Valley SBDC currently has five employees, including Arvantides.

It moved to MVCC’s thINCubator in February 2019 from its previous location at SUNY Polytechnic Institute in Marcy.

Arvantides calls it a “great collaboration” because thINCubator is a business-entrepreneurship startup space. Entrepreneurs can use a shared space so they don’t have to go out and secure office space right away. They can also take advantage of the services that can benefit a startup business.

“So, it’s been a great blend of services for young, fledgling businesses to have the SBDC and the thINCubator here together,” he says.

About SBDC

The New York Small Business Development Centers offer free business-advisory services. They’re a collaboration between the U.S. Small Business Administration, New York State, and colleges and universities. New York has 22 SBDCs. Many SBDCs are part of SUNY facilities, such as Mohawk Valley Community College or Onondaga Community College. SBDCs help both startups and existing businesses and provide one-on-one confidential business counseling to any small business that needs the service.

The Agency unveils Broome County economic-data dashboard

Regional News, Small Business, Subscriber Only

DICKINSON, N.Y. — Those interested in keeping tabs on the economic progress of Broome County amid the COVID-19 pandemic have a new consolidated window into that data. The Agency says it has developed a new Broome County dashboard to provide a snapshot of how the local economy is doing emerging from the virus crisis. The

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Tompkins Connect seeks nominations for 2020 Fab5 Young Professional Awards

Regional News, Subscriber Only

ITHACA, N.Y. — Tompkins Connect, a local young-professional organization in Tompkins County, announced it is now accepting nominations for the sixth annual Fab5 Young Professional Awards sponsored by Tompkins Trust Company. The Fab5 Awards celebrate the achievement of young professionals ages 21-40 in Tompkins County. This year, the Fab5 Committee says it is seeking young

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The Fab5 Awards celebrate the achievement of young professionals ages 21-40 in Tompkins County. This year, the Fab5 Committee says it is seeking young professionals who have been able to “shine and excel despite the unprecedented challenges” the community has faced.

New to this year’s awards, the committee has added a sixth Essential Worker “Hero” award to recognize a young professional who was considered “essential” by government officials to maintain public health and safety and keep critical-infrastructure operations working when parts of the economy were shut down because of COVID-19. Examples of essential workers may include frontline workers in the health care, food service, education, government, or other service industries.

The other Fab5 Awards categories are: Entrepreneur of the Year, Not-for-Profit Leader of the Year, Businesses Leader of the Year, Volunteer of the Year, and Rookie of the Year. Judges will be encouraged to consider individuals in all categories who have been a 2020 superhero by “showing strong leadership, resilience, and creativity” in a way that has benefitted a social-justice cause, helped the community during the pandemic, or has made a positive impact on society this past year.

Those interested in nominating an individual, can visit the Tompkins Chamber’s webpage at www.tompkinschamber.org/fab5awards. Nominations are due by Tuesday, Dec. 15. The winners will be announced in February.

Under normal circumstances, Tompkins Connect would hold an awards celebration at the Ithaca restaurant, Coltivare. This time around, the organization plans to hold a virtual ceremony.

“In early March, we will be streaming a professional production of the awards ceremony to attendees free of charge,” Katie Shaw, marketing and community relations specialist at Tompkins Trust Company and member of the Fab5 planning committee, said in a statement.

Tompkins Connect is a local young-professional organization, which was formed in 2010 and currently has more than 700 members. Tompkins Connect is housed within two organizations — United Way of Tompkins County and the Tompkins County Chamber of Commerce. The mission is to connect young professionals and emerging leaders through networking, community building, and volunteerism in Tompkins County.

CEO Focus: Support Small and Locally Owned Businesses this Holiday Season

Business Mentors, Small Business, Subscriber Only

CEO Focus: Across our region, small and locally owned businesses have borne the brunt of the COVID-19 economic crisis. These businesses are critical economic drivers that support livelihoods and create a unique sense of place within our communities. With this in mind, CenterState CEO and its partners have developed events and programs to drive patronage

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CEO Focus:

Across our region, small and locally owned businesses have borne the brunt of the COVID-19 economic crisis. These businesses are critical economic drivers that support livelihoods and create a unique sense of place within our communities. With this in mind, CenterState CEO and its partners have developed events and programs to drive patronage of small businesses during the busy holiday-shopping season.

The virtual Buy Local Bash Marketplace, [which runs from Nov. 18-24 and is] presented by AmeriCU, provides an opportunity to support local businesses this season. [The event allows] vendors to get visibility for their one-of-a-kind products and services across a larger community of potential customers during the week-long event. Shoppers that visit locally owned, independent businesses through the Buy Local Bash Marketplace website (https://buylocalbash.syracusefirst.org/) gain access to special deals available from this unique lineup of merchants.

Then, starting Nov. 29, the Greater Oswego-Fulton Chamber of Commerce will kick-off its Small Business Stroll, presented by Novelis (http://www.oswegofultonchamber.com/small-business-stroll.html). This week-long event also encourages community members to shop, eat, and save locally this holiday season. Participating Oswego County businesses will provide specials and deals throughout the program. Local, large employers, including Oswego Health, Eastern Shore Associates, and Pathfinder Bank, will also rally their teams to shop small by providing incentives to visit participating locations.

The Downtown Committee of Syracuse will also support small businesses and promote holiday experiences throughout downtown Syracuse. Every Monday, starting Nov. 23, the Downtown Committee will send out a special edition of its News & Events newsletter, focused on business specials, events, and holiday activities. You can learn more at www.downtownsyracuse.com.

When you shop local, your dollars stay in this community and help us drive a faster recovery from the COVID-19 crisis. I encourage you to think about how you can make a bigger impact this holiday season by supporting the region’s small and locally owned businesses.

Robert M. (Rob) Simpson is president and CEO of CenterState CEO, the primary economic-development organization for Central New York. This viewpoint is drawn and edited from the “CEO Focus” email newsletter that the organization sent to members on Nov. 12.

Tompkins Financial to pay Q4 dividend of 54 cents on Nov. 13

Banks & Credit Unions, Subscriber Only

ITHACA — Tompkins Financial Corp. (NYSE: TMP) recently announced that its board of directors approved payment of a regular quarterly cash dividend of 54 cents a share for the fourth quarter. The dividend is payable on Nov. 13, to common shareholders of record on Nov. 3. The dividend represents a 3.8 percent increase over the

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OPINION: Time to Get Back to Business

Opinion, Subscriber Only

The National Small Business Association (NSBA) congratulates all of the winners of the 2020 elections and looks forward to a productive nonpartisan working relationship that can address the many issues that face the small-business community. Many small businesses that have been severely impacted by the pandemic are barely treading water at this point, due in-part

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Many small businesses that have been severely impacted by the pandemic are barely treading water at this point, due in-part to politicians’ nonstop electioneering taking a front-seat to legislating.

It’s time to get back to business.

There are near-term actions that Congress must take, top among them is to pass another stimulus bill which would allow the small businesses hardest hit to qualify for a second Paycheck Protection Program (PPP) loan. Specifically, America’s small-business community has been extremely hard-hit by the pandemic and ensuing economic downturn, and now — more than ever — we need policymakers to move past the tribalism that has taken over our political process and reach across the aisle.

Some key provisions that should be part of any stimulus are:

• Allow forgiven PPP expenses to be deductible as ordinary business expenses;

• Payroll-tax relief that addresses both employer and employee rates;

• Expand, update, and improve the Employee Retention Tax Credit (ERTC);

• Allow small businesses to qualify for both a PPP loan and an ERTC, but prevent “double dipping;”

• Provide temporary liability protections for businesses that work to follow applicable public-health guidelines;

• Enable forgiveness funds to be used for PPE and other necessary safety modifications.

• Base regulatory impediments by extending filing deadlines where possible and create “grace periods” and/or an enforcement moratorium for rule violations that do not immediately endanger health and safety.

Congress must also deal the rapidly-approaching deadline of the current federal-spending approval and pass a more long-term spending bill by Dec. 11 to avoid what could be a catastrophic government shutdown.

COVID-19 continues to wreak widespread economic hardship and insecurity among small businesses and the 70 million people in the U.S. who run or work for a small business. Small business desperately needs our elected officials to carve a path forward from this pandemic — one that invites confidence in our economy and our collective ability to right this ship.

But first, we need our elected officials to simply do their jobs. Small-business owners rarely get a day off, and we’re not asking lawmakers to work 24/7; we just want them to pause the incessant interviewing for their next job.

Todd McCracken is president and CEO of the NSBA, which has been representing America’s small-business owners for more than 80 years. The NSBA calls itself “a staunchly nonpartisan organization with 65,000 members in every state and every industry in the U.S.” This article is drawn and edited from an email message the organization issued on Nov. 9.

OPINION: America Needs to Step Up to the Challenges

Opinion, Subscriber Only

Having won the election for U.S. President, Joe Biden now has an opportunity to take stock of America, to assess where we have been and where we are going. With voting now behind us, I see several trends that will challenge President-elect Biden and his team. We do not seem to have a strategy to

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We do not seem to have a strategy to fight COVID-19. The pandemic has caused over 240,000 deaths in our country, yet we are casting about for a response. President Donald Trump should have led the fight for a strategy, but he did not, and neither did the Congress.

In health care, the number of Americans with insurance fell by 5 million this year, largely because of job losses caused by the pandemic. The Affordable Care Act — enacted 10 years ago — expanded coverage and provided protection for people with pre-existing conditions, but it urgently needs improvement. President Trump has said for four years that he would replace the law, but he never unveiled a plan to do so.

On the international scene, our working relationship with allies has been an admired part of American foreign policy since the end of World War II. President Trump, however, has been comfortable with authoritarian leaders like Russia’s Vladimir Putin and China’s Xi Jinping, and has been unwilling to follow our traditional policy of working closely with our allies, especially in Europe.

President Trump has ignored our advocacy for human rights that had been a distinguishing part of American foreign policy for decades. Nations around the world look to us as a beacon of light on human rights and democracy.

Another trend is that Americans have less trust in one another, less confidence in the decency of our fellow Americans, making it more difficult to resolve problems.

America has a remarkable history of meeting our challenges dating from the founding era, when we were a nation of 2.5 million people but produced an astounding array of talented leaders: Washington, Adams, Jefferson, Hamilton, Madison, and others. We need to revisit that history, share, talk and instill its lessons in our citizens.

By stepping up to these challenges, President Biden will lift our spirits and make us feel better about our country.

Our country and its institutions are, of course, imperfect. Not every challenge can be addressed at once. All of this puts a heavy, but not insurmountable burden on the president-elect. In addressing them, he certainly will need help — and lots of it.

We are the United States of America — an exceptional nation, as we say. If we do not step up, who will?

Lee Hamilton, 89, is a senior advisor for the Indiana University (IU) Center on Representative Government, distinguished scholar at IU Hamilton Lugar School of Global and International Studies, and professor of practice at the IU O’Neill School of Public and Environmental Affairs. Hamilton, a Democrat, was a member of the U.S. House of Representatives for 34 years (1965-1999), representing a district in south central Indiana.

American Red Cross regional CEO Turner named to board of college near Buffalo area

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Alan Turner, II, who serves as regional CEO for the American Red Cross Western and Central New York region, has been appointed to the board of trustees of Daemen College in Amherst, near Buffalo. Turner started in his American Red Cross position, which is based in Syracuse, in November 2018. Before that, he served as the president

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