COVID-19 AND THE CONSTRUCTION INDUSTRY

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How Contractors Can Utilize PPP Loans for Employees to Avoid Construction Disputes and Shutdowns

During COVID-19 shutdowns, outbreaks, and an influx of OSHA regulations that have caused a number of construction projects to slow in pace, you may be curious about utilizing PPP loan funds to help. Although the first round of PPP funding ran out in just 13 days, the program has since been renewed, and your business may qualify. This is going to be crucial for contractors who are looking to avoid disputes due to delays. 

In this article, a Miami construction dispute lawyer with Cotney Construction Law shares tips on how contractors can utilize PPP loans for employees to avoid costly construction disputes and shutdowns.

Related: PPP Loan Rules for 2021

What Is the PPP Loan Program?

In 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s Paycheck Protection Program (PPP). This program was created to provide funding for small businesses and companies to pay employees’ salaries, overhead expenses, and other necessary business costs. 

These funds are only allowed to be used for very specific costs related to business. For example, 75 percent of all funds received must go directly to pay employees. There are specific requirements in place for exactly what the remaining 25 percent can be allocated towards, including healthcare costs, mortgage payments, rent payments, and utilities. Therefore, the safest approach is to use all of the funds on payroll if you can.

Related: 5 Tips for Navigating Your Way Through the Paycheck Protection Program (PPP)

Can Contractors Qualify for PPP funds?

Contractors who currently pay employees may qualify for PPP funds. The SBA recently released new guidance on how PPP loans will be distributed, which prevents large, publicly traded companies from accessing the loan program. Program guidelines state: 

“Borrowers must make this certification in good faith, taking into account 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.” 

In most cases, a company must have fewer than 500 employees to qualify for PPP funds and must not have previously been investigated for fraud relating to the program.

Related: Great News for Construction Businesses That Took Out PPP Loans

What to Do If Accused of PPP Loan Fraud in a Construction Dispute 

During a dispute, especially one in which the timeline was not met due to COVID-19 concerns, there may be accusations of PPP loan fraud. If you are accused of fraud by a dissatisfied party, employee, or even the government, it’s important to contact one of our Miami construction dispute lawyers as soon as possible. 

You can also take a few precautionary steps to protect yourself in the event of loan fraud accusations, including: 

  • Always document and account for every penny spent from the PPP loan
  • Keep a separate account for PPP loan funds
  • Understand that loans forgiveness is not promised
  • Always act in good faith 

Navigating legal matters, such as PPP loan applications, accusations of fraud, or construction disputes, on your own can be difficult. If you are in need of experienced and dedicated Miami construction dispute lawyers, contact Cotney Construction Law. Not only do we advise our clients on legal matters, but we also provide a myriad of other valuable services for construction businesses, including contract review, employment law advice, and litigation and arbitration services. We also advocate for clients involved in licensing complaints, permitting issues, stop-work orders, business immigration, and more. 

If you would like to speak with a Miami construction dispute lawyer, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.