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AMG’s Denisse N. Longo Quiñones to Participate in Roundtable Forum Sponsored by the Puerto Rico Bar Association


On May 13, 2021, at 6:00 pm, Denisse N. Longo Quiñones, President of the Federal Liaison Committee of the Puerto Rico Bar Association, who serves as Of Counsel for AMG’s Litigation and Trial Practice Department, will participate as a panelist in a roundtable forum sponsored by the Puerto Rico Bar Association, alongside the Honorable Chief Judge of the U.S District Court for the District of Puerto Rico, Gustavo Gelpí and the Honorable Clerk the U.S District Court for the District of Puerto Rico, Maria D. Antongiorgi Jordán. The roundtable forum will provide insight on the workings of the United States District Court for the District of Puerto Rico.

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The End of the Labor Reform Act of 2017?

During the 2020 election campaign in Puerto Rico, several candidates ran on a platform that included amending the Labor Reform Act of 2017, Law No. 4 of January 26, 2017 (“Law No. 4-2017”). Accordingly, it should come to no surprise that in the opening 2021 legislation session, there is a flurry of bills in the House intended to amend or repeal Law No. 4-2017. This legislative action is coupled with other amendments to labor laws rejected in the past that could find more friendly supporters within the new composition of both houses of the Puerto Rico legislature. Following is a list of labor and employment related bills that have been filed in the House (PC) and the Senate (PS):

PC-3: To repeal the Labor Reform Act of 2017. This bill would reinstate employee rights such as a shorter probationary period, the presumption of wrongful termination, and the indemnity under Law No. 80 of May 30, 1976 (Wrongful discharge); the previous vacation accrual rate contained in Law No. 180 of July of July 27, 1998 (Minimum wage, vacation, and sick leave); and other rights under Law No. 379 of May 15, 1948 (Working days and hours), Law No. 148 of June 30, 1969 (Christmas bonus) and others prior to the amendments of Law No. 4-2017.

PC-62: To prohibit salary deductions for victims and employees summoned as witnesses and to provide a leave without pay and reinstatement if more time if needed by the authorities to complete the judicial proceedings.

PC-86: To amend Article 1 Law No. 80 of May 30, 1976 (Wrongful discharge) and provide as a remedy the reinstatement of the employee, with the same employment conditions before the termination.

PC-100: To provide a special cultural leave for employees of both the public and private sectors who represent Puerto Rico in international cultural events. Eligible employees, as certified by the Puerto Rico Institute of Culture and the Puerto Rico State Department, would include artists, writers, specialized cultural personnel, and cultural promoters.

PC-109: To amend Article 5-A of Law No. 45 of April 18, 1935, Puerto Rico’s Workers Accident Compensation Act (“El Fondo”) and extend the job reservation period of 12 months to 24 months in cases of serious job-related accidents, and for other purposes.

PC-110: To provide for a one-time, 5% discount, of the El Fondo premiums for employers who do not report work related accidents in the previous 2 years.

PC-112: To introduce numerous amendments to Law No.4-2017 and reinstate and extend rights for the working class. This bill is analogous to Senate Bill 91, a 41-page comprehensive piece of legislation, which basically repeals Law No. 4-2017.

PC-118: To provide all employees with the right to “digital disconnection” of employment related electronic communications, after working hours.

PC-148: To provide at least a 30-day notice to the Puerto Rico Department of Labor, the Department of Economic Development, and all potentially affected employees, of closing decisions and consolidations of operations, to mitigate the impact of these decisions.

PC-152: To amend Law No. 42 of July 9, 2017, Puerto Rico’s Act to Manage the Study, Development, and Investigation of Cannabis for Innovation, Applicable Norms and Limitations, and provide employment protection to employees treated with medical cannabis.

PC-161: To amend Puerto Rico’s Judiciary Act of 2003 and provide for the establishment of specialized Labor and Employment Courts at the Court of First Instance, as part of a 3-year pilot program, with appropriate funding, and to establish the scope of such specialized Courts.

PC-204: To provide educational support for children of employees who died while responding and working during the COVID-19 pandemic.

PC 218: To amend the Puerto Rico Penal Code and require IT programmers, technicians, and service providers to report to the Puerto Rico Police child pornography material in the computers they service.

PC-242: To amend the Internal Revenue Code for a New Puerto Rico and provide income tax relief to the salaries of employees and to the compensation of service providers who participate in the response or recovery operations resulting from emergency declarations issued by the Puerto Rico governor, and to identify which persons are eligible for such tax relief.

PS-96: To amend Article 6 of Law No. 180-1998 and provide the use of up to 4 hours of accrued and unused sick leave to donate blood.

It is perhaps too early to know how many of these initiatives will survive the legislative and political process. But one thing is clear. We will witness some amendments to the labor reform act of 2017 if one of its main purposes, to create a more attractive investment and job creation environment, is hard to prove.

AMG will monitor the progress made in the above-mentioned bills and will issue additional newsletters and alerts as needed.

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New Laws on Workplace Harassment (“Mobbing”)

On August 7, 2020, the Governor of Puerto Rico signed into law House Bill 306 to prohibit workplace harassment (commonly referred to as “mobbing”). The “Law to Prohibit and Prevent Workplace Harassment in Puerto Rico” (our translation), applies to all employees in the private and public sector, including temporary and fixed-term employees. It defines the term “workplace harassment” and requires employers to take affirmative steps to reduce and eliminate it, including adopting and implementing anti-harassment policies. It also requires employers to address and investigate all allegations of workplace harassment.

The new law provides a non-exhaustive list of the conduct and actions that shall be considered unlawful workplace harassment. The term “workplace harassment” is defined as malicious conduct that is unwanted, repetitive and abusive, arbitrary, unreasonable or capricious, not related to legitimate business interests, and that infringes on constitutionally protected rights, such as the protection against attacks to the employee’s reputation or private life, risks against the employee’s health and integrity, among others. Some of the examples include jokes regarding an employee’s physical appearance; disregarding an employee’s work-related opinions or ideas in a humiliating way; imposing multiple disciplinary actions that are determined to be reckless; and making public comments regarding an employee’s private or family life. The law provides as a remedy double the amount of any damages caused to the employee.

Pursuant to the law, the employer shall be liable for the actions of its supervisors and other employees who engage in workplace harassment, when the employer, its agents, or its supervisors “knew or should have known” of the improper conduct, unless the employer can prove that it took immediate and appropriate action to stop the conduct. This defense is not available when it is determined that the employer itself engaged in the prohibited conduct. This law also establishes that the workers’ compensation immunity for work related injuries will not apply when it is determined that the condition suffered by the employee was prompted by a pattern of workplace harassment. It also authorizes the State Insurance Fund to recover expenses incurred in providing treatment to the employee in such situations. Opposing, denouncing, or participating in investigations related to workplace harassment will be considered protected activity under Puerto Rico’s Anti-Retaliation statute, Law No. 115-1991.

The employee must exhaust both internal remedies within the company and external remedies with the Alternate Dispute Resolution Bureau of the Judicial Branch through a mediation process as a prerequisite to filing a lawsuit in court. The Puerto Rico Department of Labor and Human Resources will issue regulations and guidance within 180 days of the enactment of the law. Consequently, employers must adopt policies and protocols prohibiting workplace harassment, including a procedure for employees to raise complaints. This law goes into effect immediately.

We will keep you informed of further developments related to the Law to Prohibit and Prevent Workplace Harassment in Puerto Rico.

For further information or, if you should have any questions or comments, you can consult the Labor and Employment law team at AMG.

LABOR DEPARTMENT
Edwin J. Seda-Fernández, Esqseda@amgprlaw.com787.756.9000 ext. 2080 or 787.281.1822
Mariel Y. Haack, Esq.mhaack@amgprlaw.com787.756.9000 ext. 2025 or 787.281.1951
Luis Pérez-Giusti, Esq.lpg@amgprlaw.com787.756.9000 ext. 2079 or 787.281.1809
Liana M. Gutiérrez, Esq.lgutierrez@amgprlaw.com787.756.9000 ext. 2019 or 787.281.1950
Verónica Torres-Torres, Esq.vtorres@amgprlaw.com787.756.9000 ext. 2015 or 787.281.1965
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Counter COVID-19 Emergency Tax Relief Act

The Complementary Act to Counter the Effects on Puerto Rico’s Economy caused by the Covid-19 Emergency, signed by the Governor on June 14, 2020 (Act 57-2020), incorporates certain permanent and temporary tax measures, which we summarize below:  

I. Exemption from Income Tax and Municipal License Tax for PPP Debt Cancellation, and for Federal and Local Subsidy, Stimulus and Aid Payments

Income derived from cancellation of debt, including from total or partial cancellation of loans granted under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), and any subsidies, stimulus or aid payments received under federal legislation or program related to Covid-19, including the CARES Act, and under any local legislation related to Covid-19, including refundable tax credits and other assistance:

  • will be excluded from: (a) gross income for Puerto Rico (“PR”) income tax purposes, including the alternate basic income tax and the alternative minimum tax, and (b) income subject to municipal license tax; and
  • taxpayers will be allowed to claim ordinary and necessary business expenses against their taxable net income, even if such expenses are paid with these federal or local aid funds.

II. Net Operating Loss Carryback Election

Net operating losses (“NOLs”) directly caused by the Covid-19 emergency during the 2020 taxable year (presumably those commenced during calendar year 2020) may be carried back to the two (2) previous taxable years, and will not be subject to the use limits established by Section 1033.14(b)(1)(D) of the Puerto Rico Internal Revenue Code of 2011, as amended; (the “PR-IRC”).  However, the maximum amount of NOLs that may be carried back is $200,000, and the maximum refund for taxes paid in previous taxable years is $50,000. 

The NOLs carry-back election is only available for taxpayers with a volume of business of $10 million or less; should be made on or before the due date for filing the 2020 Puerto Rico (“PR”) income tax return, including extensions; and applies for purposes of computing the alternate basic income tax and the alternative minimum tax.

III. NOLs Carryforward

Subject to certain special rules, NOLs directly caused by the Covid-19 emergency during the 2020 taxable year may also be carried forward and will not be subject to the 90% use limits established by Section 1033.14(b)(1)(D) of the PR-IRC.

IV. Sales and Use Tax (“SUT”) Exemption on Certain Services

The four percent (4%) SUT should not be charged on invoices for services rendered between merchants or designated professional services during the following months: April, May and June 2020. 

V. Tentative Minimum Tax on Corporations

For taxable years beginning after December 31, 2018 and before January 1, 2020, the $500 tentative minimum tax on corporations will not apply.

VI. Agreed Upon Procedures and Compliance Attestation Reports

For taxable years beginning after December 31, 2018 and before January 1, 2020, the Agreed Upon Procedures or Compliance Attestation reports issued by a PR licensed Certified Public Accountant will not be required for filing the following PR income tax returns:

  • those in which a self-employed individual claims all ordinary and necessary business expenses; and
  • those in which a corporation claims the same deductions in computing the income subject to normal tax and its net income subject to the alternative minimum tax.

VII. Commercial Licenses

All licenses and bonds under the PR-IRC, as well as any license or permit issued by the PR Permit Management Office or any other PR Government agency or Municipality that expire as of March 1, 2020, are automatically extended for a period of six (6) months.

VIII. Compliance with Certain Requirements on Tax Exemption Grants

For the 2020 taxable year, taxpayers with tax exemption grants issued pursuant to the provisions of Act 60-2019, known as the PR Incentives Code, or any other previous tax incentives acts, will be deemed to have complied with the following requirements of their tax grants, as long as the incompliance is directly associated with the emergency caused by Covid-19:

(a)        job creation and retention;

(b)       gross income or sales volume; and

(c)        investment in machinery and equipment.  

The above summary is intended for information purposes only. It cannot be considered a legal opinion, and it does not intend to consider all the tax and legal considerations that could be relevant to any particular person or entity.  

The contents of PUERTO RICO BUSINESS LAW NOTES may not be reproduced, transmitted, or distributed without the express written consent of AMG.  The material contained herein is intended for information purposes only and is not to be considered legal advice. Qualified counsel should be consulted based on individual circumstances. 

As required by US IRS rules, please understand that any information contained herein is not written to be used and cannot be used for the purpose of avoiding penalties.  We provide formal tax advice only upon completion of a formal written tax opinion in compliance with US Treasury Circular 230. 

If you need AMG’s further advise on these matters, please contact any of the following attorneys:

IX. PR Income Tax/SUT Returns and SUT Bimonthly Deposits

(1)       PR Income Tax Return.  All taxpayers, including pass-through entities, required to file PR income tax returns with original due dates between March 15 and June 15, 2020 may file them on or before July 15, 2020 without any penalties.  The due date for any income tax payment associated with such return is also extended until July 15, 2020.

(2)       Tax on Imports Monthly Return. The new due dates for the filing and payment of the Tax on Imports Monthly Returns are as follows:

PeriodNew Due Date
March 2020May 10, 2020
April 2020June 10, 2020
May 2020July 10, 2020

 (3)      SUT Monthly Return. The new due dates for filing and payment of the SUT Monthly Returns are as follows: 

PeriodNew Due Date
February 2020April 20, 2020
March 2020May 20, 2020
April 2020June 22, 2020
May 2020July 20, 2020

(4)       SUT Bimonthly Deposits.  No penalties will be imposed for failure to comply with the SUT bimonthly deposits for the months of March, April, May and June 2020, provided that the total SUT liability for each of those months is paid with the corresponding SUT Monthly Return.

The above summary is intended for information purposes only. It cannot be considered a legal opinion, and it does not intend to consider all the tax and legal considerations that could be relevant to any particular person or entity.

The contents of PUERTO RICO BUSINESS LAW NOTES may not be reproduced, transmitted, or distributed without the express written consent of AMG. The material contained herein is intended for information purposes only and is not to be considered legal advice. Qualified counsel should be consulted based on individual circumstances.

As required by US IRS rules, please understand that any information contained herein is not written to be used and cannot be used for the purpose of avoiding penalties. We provide formal tax advice only upon completion of a formal written tax opinion in compliance with US Treasury Circular 230.

If you need AMG’s further advise on these matters, please contact any of the following attorneys:

Mariangely González-Tobaja, Esq. 787-281-1804 mgonzalez@amgprlaw.com
Caridad Muñiz-Padilla, Esq. (LLM in Taxation) 787-281-1817 cmuniz@amgprlaw.com
César R. Rosario, Esq. (LLM in Taxation) 787-281-1820 rosario@amgprlaw.com
José E. Villamarzo, Esq. 787-281-1801 jvillamarzo@amgprlaw.com
Ricardo Muñiz, Esq. (LLM in Taxation) 787-281-1818 muniz@amgprlaw.com
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United States Supreme Court Holds that Gay and Transgender Employees Are Protected by Title VII of the Civil Rights Act of 1964

On June 15, 2020, in a landmark decision, the United States Supreme Court (“Supreme Court”) held in the case of Bostock v. Clayton County, that employers cannot take adverse employment actions against employees on the basis of their sexual orientation or gender identity. The Court’s opinion, authored by Justice Neil Gorsuch, states succinctly,

“Today, we must decide whether an employer can fire someone simply for being homosexual or transgender. The answer is clear. An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.” Bostock, at p. 2.

This decision rules on a trio of cases argued before the Supreme Court in October 2019. In each case, the employer terminated a long-time employee shortly after the employee revealed that they were homosexual or transgender, and for no other reason than the employee’s affirmation of sexual orientation or gender identity. In its opinion, the Supreme Court determined that Title VII of the Civil Rights Act of 1964 (“Title VII”) forbids employers from taking adverse employment actions against their employees because of their status as homosexual or transgender persons because to discriminate on these grounds requires an employer to intentionally treat individual employees differently because of their sex, which has always been prohibited by Title VII.

The Court rejected the employers’ argument that they could discriminate against homosexual and transgender persons without ever learning their sex, indicating that “[b]y discriminating against homosexuals, the employer intentionally penalizes men for being attracted to men and women for being attracted to women. By discriminating against transgender persons, the employer unavoidably discriminates against persons with one sex identified at birth and another today. Any way you slice it, the employer intentionally refuses to hire applicants in part because of the affected individuals’ sex, even if it never learns any applicant’s sex.” Bostock, at p.18-19.

The Court also rejected the employers’ contention that discrimination against homosexual and transgender persons was not prohibited because it was not specifically addressed in Title VII. The Court wisely noted that “[a]s enacted, Title VII prohibits all forms of discrimination because of sex, however they may manifest themselves or whatever other labels might attach to them.” Bostock, at p. 19-20. Similarly, the Court declined to resort to Title VII’s legislative history, stating that the employer’s argument in this regard intended to displace the plain meaning of the law in favor of something lying beyond it.

Finally, the Court declined to take up the employers’ arguments regarding the “unintended consequences” of applying the clear language of the law on this issue, noting that when it comes to statutory interpretation, its role is limited to applying the law’s demands as faithfully as it can in the cases that come before it. In so doing, the Court recognized that other issues, such as sex-segregated bathrooms and locker rooms, and dress codes, may become unsustainable after this decision, but are not properly before the Court today.

The Court pointed out that while certain employers may worry that complying with Title VII’s requirements may cause them to violate their religious convictions, concerns that Title VII will intersect with religious liberties are not new. The Court referenced the 1993 Religious Freedom Restoration Act, which prohibits the federal government from substantially burdening a person’s exercise of religion unless it demonstrates that doing so both furthers a compelling governmental interest and represents the least restrictive means of furthering that interest, as a “super statute” that sometimes “displaces” the normal operation of anti-discrimination statues. As such, it may provide defenses to employers who object, on religious grounds, to hiring homosexual and transgender individuals. That being said, the Court recognized that no religious liberty argument was properly before it, and that the issue was a matter for future cases.

In conclusion, the Court held that “[i]n Title VII, Congress adopted broad language making it illegal for an employer to rely on an employee’s sex when deciding to fire that employee. We do not hesitate to recognize today a necessary consequence of that legislative choice: An employer who fires an individual merely for being gay or transgender defies the law.” Bostock, at p. 33.

This case provides much-needed clarification as to the federal protections afforded to LGBTQ+ employees in the workplace. However, as noted by the Supreme Court in its Opinion, this case in no way resolves the array of other, related issues confronted by employers and employees in the workplace, and additional litigation is anticipated as this issue continues to develop and workplaces continue to evolve.

For further information or, if you should have any questions or comments, you can consult the Labor and Employment law team at AMG.

LABOR DEPARTMENT
Edwin J. Seda-Fernández, Esqseda@amgprlaw.com787.756.9000 ext. 2080 or 787.281.1822
Mariel Y. Haack, Esq.mhaack@amgprlaw.com787.756.9000 ext. 2025 or 787.281.1951
Luis Pérez-Giusti, Esq.lpg@amgprlaw.com787.756.9000 ext. 2079 or 787.281.1809
Liana M. Gutiérrez, Esq.lgutierrez@amgprlaw.com787.756.9000 ext. 2019 or 787.281.1950
Verónica Torres-Torres, Esq.vtorres@amgprlaw.com787.756.9000 ext. 2015 or 787.281.1965
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U.S. Small Business Administration COVID-19 Relief Loans

Following the Coronavirus (COVID-19) pandemic, the United States Congress has enacted three (3) statutes addressing disaster relief assistance and loans for individuals, businesses, states, territories and federal agencies.

The first one is The Coronavirus Preparedness and Response Supplemental Appropriations Act (the “CPRSA Act”), signed into law by President Trump on March 6, 2020. This statute provides $8.3 billion in emergency funding for federal agencies to respond to the COVID-19 outbreak, enabling the U.S. Small Business Administration (“SBA”) to offer $7 billion in disaster assistance loans to small businesses impacted by COVID-19.

On March 18, 2020, President Trump signed into law The Families First Corona Virus Response Act, which requires certain businesses (public and private) with fewer than 500 employees to provide funds for paid sick leave, either for the employee’s own health needs or to care for family members. The benefits of this statute have been summarized by a separate newsletter from our Firm’s Labor and Employment Department.

Finally, on March 27, 2020, the United States House of Representatives passed the largest economic bill in U.S. History, and President Trump signed into law The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

This newsletter will provide highlights of the first and third statutes enacted to provide relief and emergency assistance resulting from the COVID-19 negative impact on businesses. In essence, both statutes amend or incorporate the following SBA stimulus programs:

  • Economic Injury Disaster Loan Program
  • Paycheck Protection Program
  • SBA Express Loan Program

Economic Injury Disaster Loans (“EIDL Loans”)

First, under the CPRSA Act, the SBA’s EIDL Loan Program, which provides economic relief to businesses impacted by natural disasters, has been extended to losses resulting from the COVID-19 pandemic. The program provides businesses with low-interest working capital loans (i.e., 3.75% fixed interest rate for small businesses and 2.75% fixed interest rate for nonprofits). EIDL Loans can be for up to a 30-year term (determined on a case-by-case basis) and are capped at $2 million. Being a ‘disaster relief’ loan, the purpose is to assist business to get back into operations after a disaster event. Therefore, loan proceeds can be used for legitimate business purposes such as payment of fixed debt, payroll, accounts payable, real estate mortgage payments and rental payments that could not be paid because of the effects of COVID-19.

Important considerations are the following:

  • Basically most U.S. and Puerto Rico small businesses and nonprofits are eligible.
  • Although the program consists of SBA backed loans, meaning that an SBA approved lender would provide the loan and SBA would guarantee it, should a business be unable to pay back the loan to the lender, SBA would directly process the loan.
  • Personal guarantees for EIDL Loans under $200,000 are not required, and there most be at least one guarantor for loans over $200,000.
  • The CARES Act waived the requirements that (1) the eligible business be in operation for at least one year prior to the disaster, as long as it was in operation on January 31, 2020, and (2) that the borrower be unable to obtain credit elsewhere.
  • An EIDL Loan may be granted in addition to a loan under the Paycheck Protection Program discussed below, provided the loans are not used for the same purpose. Therefore, although businesses may be eligible for loans under both the EIDL Loan Program and the Paycheck Protection Program, they are unable to borrow under the EIDL Loan Program for the same costs being covered by a loan under the Paycheck Protection Program.

Economic Injury Disaster Advances for EIDL Loans

Borrowers may request and receive within three (3) days of the filing, an emergency advance in the amount of $10,000, which is not required to be repaid if the EIDL Loan is not approved. However, it is not clear if repayment will be required under other circumstances. The funds may be used for payroll costs, increased material costs, rent or mortgage payments, or for repayment of obligations that cannot be met as a result of loss revenue.

Paycheck Protection Program

One of the core pieces of the CARES Act is the Title I — Keeping Workers Paid and Employed Act —, which provides $349 billion for small businesses through federally-backed loans under a modified and expanded SBA Section 7(a) loan guaranty program called the Paycheck Protection Program. The loans will be available through SBA approved lenders, who can start processing the loans on April 3, 2020.

The purpose of the Paycheck Protection Program is to provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during the COVID-19 emergency. If employers maintain their payroll, the loans may be forgiven. Small businesses and other eligible entities, including nonprofits, will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020.

Eligibility

  • Businesses and entities that employ not more than 500 employees (must have been in operation on February 15, 2020).
  • Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed
  • Any business concern that employs not more than 500 employees per physical location of the business concern in hospitality and food service industry.
  • The uncertainty of the economic conditions makes necessary the loan to support the ongoing operations.

Loan amount & significant terms

The maximum loan amount is $10 million, not to exceed 2.5 times the borrower’s average monthly payroll cost for the past 12 months (excluding compensation over $100,000).

  • Principal and interest payments are deferred for 6 months.
  • Maximum interest rate is 4%.
  • Loan fees are waived.
  • No collateral is required.
  • No prepayment fees apply.

Allowable uses of loan proceeds

  • Payroll costs.
  • Payments of interest on any mortgage obligation (which shall not include any payment or prepayment of principal on the mortgage obligation).
  • Rental payments.
  • Interest on any other debt obligations that were incurred before February 15, 2020.

Forgiveness amount calculation

Forgiveness on a covered loan, if approved, would be equal to the sum of the payroll costs (and other costs covered by a loan under the Paycheck Protection Program) incurred during the 8-week period following the origination date, plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation), plus any payment on any covered rent obligation, plus and any covered utility payment. The loan forgiveness amount may be reduced if the borrower reduces the number of employees or salaries and wages during the 8-week period following the origination of the loan.However, this reduction penalty does not apply to the extent the borrower restores such workforce count, salaries and wages by June 30, 2020. Any amount not forgiven is carried forward as an ongoing loan with a maximum term of 10 year. The amount forgiven would not be considered taxable income for U.S. income tax purposes (Puerto Rico Treasury has not yet issued a determination to such effect).

SBA Express Loan

An SBA Express Loan is a financing option that has been available to small and medium size business owners prior to enactment of the CARES Act.The CARES Act amended the terms of this type of loan so that through December 31, 2020, the maximum amount that may be borrowed is increased from $350,000 to $1,000,000. Different from an SBA 7(a) loan, an SBA Express Loan request must be either approved or denied in 36 hours. Loan proceeds may be used for short and long term working capital needs, acquisition of real estate, furniture, fixtures and equipment, construction or renovation, business acquisitions and refinancing. The CARES Act waives loan fees, provides 12-month deferred payments and no prepayment penalties. There is no indication in the CARES Act on whether these loans may be forgiven.

CORPORATE DEPARTMENT

José A. Fernández-Jaquete, Esq.

jafernandez@amgprlaw.com

787.756.9000 ext. 2064 or 787.281.1964

Francisco J. García, Esq.

fgarcia@amgprlaw.com

787.756.9000 ext. 2000or 787.281.1800

Néstor J. Lo Presti, Esq.

nlopresti@amgprlaw.com

787.756.9000 ext. 2014 or 787.281.1814

Miguel Carbonell-Astor, Esq.

mcarbonell@amgprlaw.com

787.756.9000 ext. 2068 or 787.281.1968

Juliana Pérez-Alemañy, Esq.

jperez@amgprlaw.com

787.756.9000 ext. 2059 or 787.281.1959

The Corporate Department of AMG is monitoring this constantly evolving situation and will continue to provide updates as additional information becomes available or other statutes are enacted. Likewise, you can also consult the Corporate Law team at AMG if you have any questions or any specific situation that you may want to discuss.