Necessity Requirement under the PPP

Any borrower that, together with its affiliates, received PPP loans with a principal amount of less than $2m will be deemed to have made the necessity certification in good faith.
With respect to borrowers that, together with their affiliates, received PPP loans of $2m or more, if the SBA determines the borrower lacked an adequate basis for the necessity certification and, in response, the borrower repays the loan, the SBA will not pursue administrative enforcement or referrals to other agencies based on the necessity certification.

Answer : In addition to reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary. Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification.

Applicants must make the necessity certification in good faith.
In making the certification, applicants must evaluate both (a) their access to other sources of liquidity to support operations, and (b) if there are other sources of liquidity, whether they would be significantly detrimental to the business.
PPP loans provided to large public companies will be subject to heightened scrutiny, however the principle applies equally to businesses that are owned by private companies and presumably other privately-owned businesses. On a related note, the SBA and Treasury Department released guidance providing that private equity and hedge funds are not eligible for PPP loans, but portfolio companies of private equity funds are eligible if they meet the PPP’s requirements.
Companies must be prepared to demonstrate their basis for the necessity certification upon request.

At this time, it seems unlikely that merely having access to other sources of funds would make a business ineligible for a PPP loan. This will likely be a balancing test based on the facts and circumstances. However, if a business has access to other funds, it should be prepared to explain why the use of those funds is impractical or could be significantly detrimental to the business. We are hopeful that the SBA and Treasury Department will clarify this requirement in its upcoming guidance.

The impact of COVID-19 on the business and the related economic uncertainty that the business is facing.
The manner in which COVID-19 is expected to adversely affect the business’s ongoing operations. For example, is the business likely to experience a reduction in work/business? Would the business potentially have to lay off employees in the absence of the loan?
Whether alternative sources of liquidity are available on reasonable terms and not significantly detrimental to the business. If so, are those sources readily available and sufficient in the absence of a PPP loan?

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California’s Commercial Tenant Protection Act: What SB 1103 Means for Commercial Landlords

September 8, 2026

For decades, commercial leasing in California has been governed by the assumption that commercial tenants generally possess sufficient sophistication to negotiate and protect their own interests. Senate Bill 1103, known as the Commercial Tenant Protection Act (“CTPA”), alters that framework for certain smaller commercial tenants. Effective January 1, 2025, the law extends several protections traditionally associated with residential tenancies to qualifying commercial tenants. The statute imposes new requirements relating to rent increase notices, lease translations, common area maintenance (“CAM”) charges, and termination notices. Landlords leasing space to small businesses, restaurants, and nonprofit organizations should understand when these requirements apply and consider whether updates to existing leasing practices are warranted. Who Is a “Qualified Commercial Tenant”? The CTPA applies only to a “qualified commercial tenant” (“QCT”), not to all commercial tenants. A tenant qualifies if it is: 1. A microenterprise, generally defined as a business with five or fewer employees and limited access to capital; 2. A restaurant with fewer than 10 employees; or 3. A nonprofit organization with fewer than 20 employees. Publicly traded companies and their subsidiaries are excluded from the statute’s protections. However, franchisees may still qualify if they independently satisfy the applicable employee and eligibility requirements. Importantly, a landlord’s obligations under SB 1103 are triggered only after the tenant provides written notice affirming its status as a qualified commercial tenant. That notice must have been provided within the preceding 12 months. Until the landlord receives the required attestation, the statute’s protections generally do not apply. The law applies to commercial leases executed, renewed, or amended on or after January 1, 2025. CAM Charges: New Transparency and Substantiation Requirements One of the most significant operational changes under the CTPA involves CAM charges and other operating expense pass-throughs. Before charging a QCT for CAM expenses or similar costs, landlords must ensure that: 1. The costs are allocated proportionately among tenants through square footage or another reasonable and documented methodology; 2. Supporting documentation regarding the allocation method is provided before lease execution and, upon written request, within 30 days; and 3. The charges either were incurred during the prior 18 months or are reasonably expected to be incurred during the next 12 months, with documentation supporting the amounts charged. These requirements may create practical challenges for landlords, particularly in shopping centers or mixed-use properties where CAM allocations involve anchor tenants, negotiated exclusions, or other unique arrangements. The substantiation requirement may also limit the flexibility landlords have historically exercised in estimating or “grossing up” operating expenses. As a result, some landlords are reevaluating the use of gross or modified gross lease structures, including forms commonly used in AIR leases, to minimize the administrative burden associated with CAM compliance. Longer Notice for Rent Increases and Terminations SB 1103 also expands notice requirements for certain qualified commercial tenants. For month-to-month tenancies and other periodic tenancies, Civil Code section 827(a) requires: 1. At least 30 days’ written notice for a rent increase of 10 percent or less; and 2. At least 90 days’ written notice for a rent increase exceeding 10 percent. The statute also incorporates Civil Code section 1946.1(a) for qualified commercial tenants. If a tenant has occupied the premises for more than 12 months, a landlord generally must provide at least 60 days’ written notice before terminating the tenancy. Landlords who routinely rely on standard commercial notice provisions should review their forms and procedures to confirm they remain compliant when dealing with QCTs. Enforcement: Why Compliance Matters Compliance with the CTPA is important because many of its protections cannot be waived by agreement. A landlord that violates the statute may face liability for damages and attorneys’ fees. In cases involving willful or oppressive conduct, punitive damages may also be available. In addition, a tenant may raise a statutory violation as a defense in an unlawful detainer action, potentially complicating or delaying efforts to recover possession of the property. Given these risks, landlords should review both their lease documentation and day-to-day leasing procedures. What Landlords Should Do Now Landlords should consider taking the following steps before entering into new leases or renewals with smaller commercial tenants: 1. Review existing tenant rosters to identify tenants who may qualify for CTPA protections. 2. Evaluate current lease forms and update provisions relating to CAM charges, notices, and lease translations where necessary. 3. Establish procedures for receiving and tracking tenant qualification notices. 4. Consider whether gross or modified gross lease structures may be appropriate for certain tenants in order to reduce CAM-related compliance issues while maintaining the intended economic terms of the lease. The Commercial Tenant Protection Act represents a notable shift in California commercial leasing law. Although the statute applies only to a limited category of tenants, its requirements can affect lease administration, expense recoveries, and enforcement rights. Landlords should take a proactive approach to identifying qualified commercial tenants and updating leasing practices to address the law’s requirements. At Reicker Pfau, we assist commercial landlords with lease reviews, compliance strategies, property operations, and dispute resolution matters. If you have questions regarding SB 1103 or its application to your properties, please contact our office.

Reicker Pfau Represents COR in $30 Million Investment from FTV Capital

July 31, 2026

Reicker, Pfau, Pyle & McRoy, LLP proudly represented COR, an AI-powered project profitability platform for agencies and professional services firms, in connection with a $30 million investment from FTV Capital, a sector-focused growth equity firm. COR combines project management, automated time tracking, resource planning, and real-time profitability analytics in a single platform. The company serves thousands of teams across more than 38 countries. The investment will support the continued development of COR’s AI capabilities, expansion into adjacent industries, and international growth. As part of the investment, FTV Capital Partner Alex Malvone and Principal Tommy Tighe joined COR’s board of directors. The Reicker Pfau team was led by Partner Nicholas Behrman, with Associates Jake Glicker and Samara Harris. A full announcement regarding the investment can be found here .

2026 Employment Law Updates

July 22, 2026

Complying with applicable employment laws is a never-ending battle for California employers. While certain changes and updates can easily become part of a compliant employer’s annual routine, such as increasing employees’ wages to align with effective minimum wage updates, refreshing the applicable posters required to be displayed in the workplace, and reviewing employee salaries to determine which exempt employees need raises to continue to qualify as exempt, new laws mean new required updates to an employer’s policies and procedures. For any employer that has not yet reviewed their employment practices through the 2026 lens, here is a short guide for some essential updates to implement immediately. Minimum Wage Effective as of January 1, 2026, the statewide minimum wage has increased to $16.90 per hour. Additionally, the minimum annual salary for “exempt” employees has increased to $70,304. Please note that these minimums are set at the statewide level, but an employer may be subject to higher minimums depending on the applicable local jurisdiction and employer’s industry. For example, effective January 1, 2026, the minimum wage in West Hollywood is $20.25 per hour. Pay Scale Information In addition to the updated minimums regarding what employees must be paid, employers are also now restricted in what they must communicate to potential employees regarding the expected salary or hourly wage range for the applicable job posting. As part of SB 642 , signed into law by Governor Newsom on October 8, 2025 and effective January 1, 2026, employers with 15 or more employees are required to provide clearer details in any job posting regarding the pay scale for the applicable position. The applicable “pay scale” cannot be a general range for what an employee in that position may make in the future. Instead, SB 642 redefines “pay scale” to mean “a good faith estimate of the salary or hourly range that the employer reasonably expects to pay for the position upon hire.” Updates to Mandatory Cal/WARN Notice Requirements Certain California employers are also subject to additional information and notice requirements. Pursuant to SB 617 , employers subject to the California Worker Adjustment and Retaining Notification (“ Cal/WARN “) Act who are required to provide written notices before ordering a mass layoff, relocation or termination at a covered establishment must now include in such notices whether or not the employer plans to coordinate services for the affected employees, such as a rapid response orientation, and through which entity such services will be coordinated, if at all. The notices must also include a functioning email address and telephone number for the local workforce development board and particular language pointing employees to local workforce development boards and America’s Job Center of California. Such employers will also need to include in the applicable notices a description of CalFresh (the statewide food assistance program) and CalFresh contact information in the form of the phone number for the CalFresh benefits helpline and a link to the CalFresh website. Workplace Know Your Rights Act California employers, as of February 1, 2026, are also subject to the Workplace Know Your Rights Act, established by SB 294 . Among other things, the Workplace Know Your Rights Act requires such employers to provide a stand-alone written notice to each of its current employees on February 1, 2026, and annually thereafter, containing a description of workers’ rights in areas such as (i) the right to workers’ compensation benefits, (ii) the right to notice of inspection by immigration agencies, (iii) protection under unfair immigration-related practices, (iv) labor organizing rights, (v) constitutional rights when interacting with law enforcement at the workplace, (vi) a description of certain new legal developments as determined by the California Labor Commissioner, and (vii) a list of the enforcement agencies that must enforce the underlying rights set forth in the notice. Template notices have been posted by the California Labor Commissioner and can be used by employers to comply with the notice requirements of the Workplace Know Your Rights Act. To ensure compliance with current California employment laws, employers should closely review their company policies and procedures regularly and check in with their employment counsel for relevant updates and reminders about best practices.