Practice Tips

Practice Tips

  • Posted by: Jeremy Salvador

In a world dealing with COVID-19, countless businesses have been ravaged by the effects of the government imposed shut down. Naturally, these economic issues affect both incomes available for support and business valuation in the family law world. On the other hand, multiple businesses have been thriving in the pandemic economy. How can you do your due diligence?

The government has offered multiple programs to combat the negative economic effects of the pandemic. If the litigant is a business owner or exerts management, control, or influence over the organization’s executive functions, be sure to request the documentation related to any and all pandemic stimulus benefits.

The Payroll Protection Program (PPP) was designed to replace payroll expenses for 2.5 months. It is a loan administered by participating SBA lenders that can be fully forgiven if spent according to the guidelines. While no stari decisis exists that provides specific authoritative on how a PPP loan should be treated in the context of a California dissolution, it stands to reason that if the company is slated to have these funds forgiven, the funds may be part of income available for support.

The Economic Disaster Loan (EIDL) is a non-forgivable loan SBA loan amortized over 30 years. Initially, its maximum amount was $2 million. Subsequently, the maximum amount was reduced to $150,000. This program is administered directly by the U.S Small Business Administration, so getting copies of loan applications may be difficult and time-intensive. However, if you are able to get the loan applications, they include the gross revenues of the business as reported by the applicant (Calcaterra argument).

Finally, beware that many folks have been utilizing strategic layoffs and furloughs. With combined state unemployment and federal pandemic benefits, someone can receive up to $1,000 per week in unemployment benefits in California.

Author: Jeremy Salvador

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