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Tag: SBA

PPP Payback?

Last week, the Small Business Administration (SBA) launched a second round of the Paycheck Protection Program. PPP allows banks to “forgive” government-guaranteed loans to small businesses struggling due to the pandemic. Unfortunately, government guidance on necessary documentation/calculations to ensure forgiveness is sorely lacking.

Many small business owners expect their loans to ultimately be forgiven “but it is not that simple,” according to Paul Merski, of the Independent Community Bankers of America. He advises that everyone keep “their information and paperwork in order.”(Reuters, May 1, 2020)

The PPP regulation states the following:

  • Borrowers must spend 75 percent of the loan on payroll costs like salaries, tips, leave, severance pay, and health insurance, within the first two months.
  • Borrowers must spend the remaining 25 percent on other “running” costs, such as utilities and rent.

All money spent on non-qualifying expenses must be repaid within two years at a one percent annual interest rate. (ibid)

Confusion and uncertainty surround the re-payment or forgiveness process itself. Who certifies that borrowers actually meet the 75 percent threshold and using borrowed funds as required? Will SBA will issue standard guidelines for forgiveness? Small business owners need to know which documents to maintain and records to keep. EZGSA, like all of you, await some clarity on next steps.

Are you unclear on your Small Business loan payback? We will let you know as soon as we do. In the mean time, feel free to give us a call.

Bye Bye Self Certify

Certification changes for Women-Owned Small Businesses (WOSBs) and Economically Disadvantaged WOSBs (EDWOSBs) will occur this summer. The Small Business Administration (SBA) expects the updated regulation to be published on 30 June 2020, and to go into effect 30 days after. (U.S. Small Business Administration)

Info we have so far includes:

  • Self-certification as a WOSB or EDWOSB will end
  • Certification, going forward, will be accomplished through an approved third-party entity or through SBA’s free online certification at certify.sba.gov. (ibid)

To assist in awarding women-owned business contracts, the government limits competition, by including just those businesses participating in the women’s contracting program. The goal of the government is to award the contracts to women-owned businesses in industries where WOSBs are underrepresented. Some contracts are restricted even further to include economically disadvantaged women-owned small businesses (EDWOSBs) only. The SBA keeps a current list of those eligible industries. (ibid)

Eligibility for the women’s contracting program:

  • Qualify as a small business
  • Company at least 51% owned and controlled by women who are U.S. citizens
  • A company with the day-to-day management of operations and long-term decisions controlled by women

Eligibility for the economically disadvantaged business within the women’s contracting program:

  • Meet all requirements of the women’s contracting program
  • Business is owned/controlled by one or more women, each with a personal net worth less than $750,000
  • Business is owned/controlled by one or more women, each with $350,000 or less in adjusted gross income averaged over the previous three years
  • Business is owned/controlled by one or more women, each $6 million or less in personal assets

The eligibility requirements are spelled out in Title 13 Part 127 Subpart B of the Code of Federal Regulations (CFR). (ibid)

To participate in the women’s contracting program, you must be certified as a women-owned business. First the company must have a profile on SAM.gov, and then go through the aforemention process at certify.SBA.gov. The SBA has approved the following four organizations to provide third-party certifications:

Updating certification information annually through both SAM.gov and certify.SBA.gov will maintain your status within the program as well as make contracting officers aware that your business meets the eligibility requirements to compete under the WOSB or EDWOSB umbrella.

Questions about self-certification, third-party certification, or the women-owned business contracting arena? Give us a call.

 

Subcontract Reporting Extension

Due to the current National Emergency, the Small Business Administration (SBA) has announced an extension of time for filing Individual Subcontracting Reports (ISR). (U.S. Small Business Administration, April 2, 2020)

The time for filing semi-annual Individual Subcontracting Reports (ISR) has been extended until 30 June 2020. SBA is also extending the deadline to that date for filing ISRs of contracts completed between 13 March  and 31 May 2020. (ibid)

Because most states and the District of Columbia are following quarantine guidelines for residents, many records necessary for meeting these reporting requirements are unavailable. Therefore, the SBA will consider any of these ISRs submitted by 30 June 2020, to be timely. (ibid)

Questions about your ISR and when it is due? Give us a call.

BAA TAA SBA Huh?

It appears the Buy American Act (BAA) and the Trade Agreements Act (TAA) may, under certain instances, actually reduce the federal market accessibility for US manufacturers. (Federal News Network, October 28, 2019)

In order to be considered for a small-business set-aside, end-items must be manufactured in the U.S. Or the company can qualify as a non-manufacturer (13 CFR 121.406) if:

  • The company is principally engaged in the retail or wholesale  of the product and normally sells the type of product being supplied
  • The company takes ownership of the item with its personnel, equipment or facilities consistent with industry practice and
  • The company supplies the end item of a small business manufacturer, processor or producer made in the U.S. or obtains a waiver of the requirement. (ibid)

Non-manufacturers may receive an individual waiver if the Small Business Administration (SBA) accepts the contracting officer’s determination that no small business manufacturer “reasonably can be expected to offer a product meeting the solicitation specifications.” Additionally, the SBA Administrator may provide a class waiver if she determines that no small business manufacturer “product or class of products is available to participate in the Federal procurement market.”

Of course, TAA restricts product acquisition to manufacturers in the U.S. and certain “designated countries,” (those companies that have a Free Trade Agreement with the U.S. or participate in the World Trade Organization Government Procurement Agreement (WTO GPA)). Therefore, products from non-signatory countries such as China are ineligible for award.  Per FAR 25.101(a), BAA restricts the purchase of non-domestic end-products as well. Some exceptions provide more access to foreign end-products than under the TAA; for instance, BAA makes exceptions where the domestic offer is not the low offer (FAR 25.103) as well as in certain instances of public interest for non-availability in the U.S., and at an unreasonable cost. (ibid)

TAA does not apply to small business set-asides, FAR 25.401, leaving the BAA in place. The waiver of the non-manufacturer rule for a set-aside gives a somewhat illogical result. This makes the TAA inapplicable to set-asides, and the BAA applicable to set-asides where the non-manufacturer rule has been waived. This might result in the Government purchasing an item, such as a medical/surgical product, manufactured in a non-designated country that has subsidized its price to assure the product’s selection. Therefore, the intended law restricting non-domestic products actually facilitates more access to those products. This includes products of manufacturers from non-designated countries, rather than providing controlled access over non-domestic end-products. (ibid)

Ultimately, this could harm small and non-small manufacturers producing domestically. This may also open up small business set-asides to products made in China that would otherwise be ineligible for purchase if the TAA applied. A good deal more statutory guidance and analysis are warranted. (ibid)

Do you have questions about your compliance obligations under an upcoming proposal or current contract? Give us a call.

Scrubbing the FAR

The Federal Register Publications requests comments on the following three proposed Federal Acquisition Regulation (FAR) rules:

  1. FAR Case 2015-002 – the rule proposes to amend the FAR to require electronic submission of DD Form 254, Contract Security Classification Specification. This form is used to communicate security requirements to contractors when the performance of contract requirements requires access to classified information and the form acts to automate processes and workflows. (This form is also used by prime contractors to communicate in the same manner to subcontractors.) Comments should be submitted by September 10, 2019, via the Federal eRulemaking portal. (Acquisition.gov)
  2. FAR Case 2018-007 – the rule proposes to amend the FAR  by revising thresholds subject to inflation adjustments so that the periodic inflation adjustments will apply to existing contracts and subcontracts that contain the revised clauses. The next rule raising thresholds for inflation is planned to go into effect, October 2020. Comments are due by August 23rd, via the Federal eRulemaking portal. (Acquisition.gov)
  3. FAR Case 2018-003 – the rule proposed by NASA, GSA, and DOD is to amend the FAR to implement section 1614 of the National Defense Authorization Act for the Fiscal year 2014 and regulatory changes made by the Small Business Administration (SBA). (Section 1614 addresses credit for lower-tier small business subcontracting.) (ibid) 

Additionally, the following are up for review.

  • Section 1614 of the NDAA for FY 2014 amended the Small Business Act when a prime contractor has an individual subcontracting plan for a contract with a single executive agency, the prime contractor receives credit towards its subcontracting goals for awards made to small business concerns at any tier by subcontractors with individual subcontracting plans. Additionally,  section 1614 provides new assurances for offerors relating to activities to be performed by the contractor to monitor the performance of subcontractors subcontracting plans, and by subcontractors to monitor the performance of their subcontractors subcontracting plans. Section 1614 requires the contractor to demonstrate procedures established to ensure subcontractors at all tiers comply with their subcontracting plans. Section 1614 also revised the definition of “subcontract” in the Small Business Act. (Acquisition.gov)
  • Per SBA’s final rule, the prime contractor’s performance under an individual subcontracting plan will be evaluated based on its combined performance under the first-tier and lower-tier goals. Additionally, the final rule implements the statutory requirements related to the new assurances and written statement to be included in subcontracting plans. Comments are due by August 26th via the Federal eRulemaking portal. (regulations.gov)

Working through how these FAR changes will affect your current contract, or future bidding/contracts? Give us a call and we can explain.