PPP Safe Harbor 1: An Overview of the Executive Orders in New York to Use for Your Pardon Application | Bond Schoeneck & King PLLC


As previously noted, the Paycheck Protection Program (PPP) Flexibility Act established an additional safe harbor for loan forgiveness reductions and full-time equivalent staffing for the PPP. A borrower’s reduction in the number of full-time equivalent employees will not affect the rebate if the borrower, in good faith, is able to document their inability to resume the same level of business activity as that business was operating by February 15, 2020 due to compliance with established requirements or guidelines issued by the Secretary of Health and Human Services, CDC Director or OSHA during the period from March 1, 2020 as of December 31, 2020, regarding maintenance standards for sanitation, social distancing services, or any other worker or customer safety requirements related to COVID-19 (the Safe Harbor). The Small Business Association (SBA) later clarified that the Safe Harbor includes state and local government ordinances.

It appears that the SBA will interpret this Safe Harbor broadly and predicts that the vast majority of borrowers will rely on this particular Safe Harbor (as opposed to other available Safe Zones).

If a borrower intends to certify that he or she qualifies for the Safe Harbor, the PPP forgiveness application requires the borrower to keep documentation to support the certification. This documentation includes copies of relevant government orders, copies of applicable requirements for each borrower’s location, and relevant borrower’s financial records.

As of September 10, 2020, Governor Cuomo has issued more than 60 Executive Orders (OEs) related to the COVID-19 pandemic. Below is a complete overview of the executive orders and other government documents that your company can keep if it certifies this Safe Harbor to avoid a discount reduction. However, note that it’s important to consider when your specific region was approved to reopen under Governor Cuomo’s four phases, including which phase your business qualifies for.


  • Capacity / occupancy reduction:
    • EO 202.1 issued on March 12, 2020 (reduction to 50% of capacity and attendance)
  • Reduction of non-essential labor:
    • EO 202.6 issued March 18, 2020 (50% reduction); EO 202.7 issued March 19, 2020 (75% reduction); EO 202.8 issued March 20, 2020 (100% reduction); EO 202.13 issued on March 30, 2020 (continuous reduction until April 15, 2020); OE 202.14 issued April 7, 2020 (continuous reduction until April 29, 2020); EO 202.18 issued April 16, 2020 (continuous reduction until May 15, 2020); EO 202.31 issued May 14, 2020 (continuous reduction until May 28, 2020); EO 202.34 issued on May 29, 2020 (implementation of reopening phases):
      • Phase 1: EO 202.31 issued May 14, 2020
        • Industries: Construction; Agriculture, forestry, fishing and hunting; Retail (limited to curbside or in-store pickup or drop-off); Manufacturing; Wholesale
      • Phase 2: EO 202.35 issued May 29, 2020
        • Industries: Desks; Real estate; Retail (in store); Vehicle sales, leases and rentals, retail rental, repair and cleaning, commercial building management
      • Step 3: EO 202.41 issued June 13, 2020
        • Industries: Restaurants / Food services; Personal care
      • Step 4: EO 202.45 issued June 26, 2020
        • Industries: Higher Education; Kindergarten to grade 12 schools; Low risk outdoor arts and entertainment; Low risk indoor arts and entertainment; Media production; Professional sports competitions without fans; Shopping centers; Gyms and fitness centers

As a reminder, each region entered each phase at different times and the date of the reopening phase of your region may differ from the dates of the EOs indicated above. In addition, industry specific guidelines, which may also be relevant to your ability to assert the Safe Harbor, have also been published. These guidelines set out reopening information for industries including, but not limited to: (i) schools; (ii) the camps; (iii) personal care services; (iv) shopping centers; (v) catering and bar services; (vi) large gatherings and event venues; (vii) gymnasiums, fitness centers and exercise classes; (viii) video lottery and casino gaming facilities; (ix) movie theaters; and (x) places of entertainment.

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