The Paycheck Protection issue23 Jan 2021 12:59
As you know ZM makes various claims related to PP, such as the company only had 2 employees, they were not based in USA, that there was a fraudulent bank account involved.
PP can cover non-US employees –
"Recognizing this inconsistency, earlier today SBA issued a new rule on eligibility for companies with foreign affiliates. SBA has now made clear that all employees of foreign affiliates (not just those employees in the U.S.) need to be counted in determining eligibility for a PPP loan. Importantly, however, because SBA acknowledges that its guidance on this point has been inconsistent, SBA has provided yet another safe harbor. If a company with foreign affiliates applied for its loan prior to May 5 and only included U.S.-based employees in the employee count, it will not be deemed to have made an inaccurate certification"
https://govcon.mofo.com/international-public-procurement/are-foreign-employees-included-in-calculating-size-for-ppps-500-employee-size-standard-new-guidance-makes-the-answer-unclear/
Also, PP can be used to pay some types of expenses, not just payroll –
"the loan is used for payroll costs for employees whose principal place of residence is in the United States and payments for mortgage interest, rent and utilities for the eight-week period after the loan is made; and the employee and compensation levels are maintained."
https://www.osler.com/en/resources/regulations/2020/covid-19-emergency-forgivable-loans-for-small-u-s-businesses
So the payments from SN to ZM and his son could be salary payments as required by the PP rules.
What’s not so clear is why FRR appears to be claiming for 12 staff. PP defines staff as –
“Your PPP loan amount is determined by your 2019 payroll numbers (or net profit numbers if you're self-employed). So if you had three employees in 2019 who made $3,000 each month, you will need to keep those three employees on payroll at the same salary”
However it seems you can apply for PP based on historical staff levels but will only have your loan forgiven-in-full if you maintain those historical staff levels. If you reduce headcount you will eventually need to repay the loan (I believe after 2 years @1% interest). From that perspective FRR wouldn’t seem to be doing anything wrong if they could meet the headcount requirement and not need the loan to be forgiven in full.
Regarding bank accounts – I think initially the loans were distributed via certain banks. It might have made sense to have an account at that bank, it might have been a requirement.
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