Drew explains that “borrowers should understand that the lender is not waiving those payments, but rather temporarily suspending the collection of the payments.”

For borrowers who request a mortgage forbearance, Demers advises that, “lenders are aware that the financial impacts from the pandemic will last for many years to come. As a borrower facing financial difficulty, you should take the initiative with your lender to discuss options.” 

Drew represents national and regional financial institutions and private equity clients in transactional and litigation matters. He also works with banks and private lending clients through all stages of the lending relationship.

Read the full article in the  U.S. News & World Report here.

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The firm’s attorneys included in the guide are listed below.

Top Lawyers

Mitchell A. Bierman – Government Relations, Litigation

Mitchell J. Burnstein – Eminent Domain

Jamie A. Cole – Government Litigation, Corporate And Business Litigation

Andrew Demers – Banking and Financial Institutions

Alan K. Fertel – Entertainment And Sports, Civil Litigation

Chad S. Friedman – Land Use, Zoning and Environmental Law

Edward G. Guedes – Appellate Law

Alen H. Hsu – Business and Real Estate Litigation

Michael J. Kurzman – Construction Law

John Quick – Litigation

Anthony L. Recio – Real Estate – Land Use And Zoning

Brett J. Schneider – Employment Law

Clifford A. Schulman – Environmental, Real Estate – Land Use And Zoning

Joseph H. Serota – Corporate And Business Litigation, Government Litigation

Marc I. Solomon – Business Organizations, Acquisitions and Conveyances

Richard J. Weiss – Government

Rana M. Gorzeck – Banking or Commercial Real Estate

Lewis R. Cohen – Banking or Commercial Real Estate

Top Up and Comers

Alicia Gonzalez – Real Estate, Eminent Domain

Justin D. Luger – Litigation

Edward O. Martos – Land Use And Zoning

Click here to view the full 2022 South Florida Legal Guide.

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The Firm was also selected as a Top Law Firm, which highlights firms with excellent credentials. Firms included are nominated by the Top Lawyers and Top Up and Comers in the publication’s annual submission.

The Firm’s attorneys included in the guide are listed below.

Top Lawyers
Mitchell A. Bierman – Government Relations, Litigation
Mitchell J. Burnstein – Eminent Domain
Jamie A. Cole – Government Litigation, Corporate And Business Litigation
Ignacio G. Del Valle – Real Estate, Corporate And Business
Andrew Demers – Banking and Financial Institutions
Alan K. Fertel – Entertainment And Sports, Civil Litigation
Chad S. Friedman – Land Use, Zoning and Environmental Law
Edward G. Guedes – Appellate Law
Alen H. Hsu – Business and Real Estate Litigation
Michael J. Kurzman – Construction Law
John Quick – Litigation
Anthony L. Recio – Real Estate – Land Use And Zoning
Brett J. Schneider – Employment Law
Clifford A. Schulman – Environmental, Real Estate – Land Use And Zoning
Joseph H. Serota – Corporate And Business Litigation, Government Litigation
Marc I. Solomon – Business Organizations, Acquisitions and Conveyances
Richard J. Weiss – Government

Top Up and Comers
Alicia Gonzalez – Real Estate, Eminent Domain
Justin D. Luger – Litigation
Edward O. Martos – Land Use And Zoning
Alison F. Smith – Labor And Employment

Click here to view the full 2021 South Florida Legal Guide.

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• New (first-time) applicants that did not receive a PPP loan in 2020 may now apply (max loan amount of $10 million)
• A qualifying business that previously received a PPP loan in 2020 may apply for a “Second Draw” PPP loan under certain circumstances (max loan amount of $2 million) if the business:
• Exhausted all funds from the first PPP loan;
• Employs no more than 300 employees; and
• Experienced at least a 25% a decline in gross receipts in Q1, Q2, Q3, or Q4 2020 as compared to the same quarter in 2019
• Both first and Second Draw PPP loan applications must be made by the current deadline of March 31, 2021
• Applicants may now choose their own covered period in which to spend the PPP loan proceeds (minimum of eight weeks up to a maximum of 24 weeks), providing more flexibility for workplace decisions
• PPP loans are not included as taxable income, and expenses paid with PPP funds are now tax deductible
• Expanded eligible non-payroll expenses may now include operational expenditures such as software, PPE, and safety improvements like air filtration and employee health screenings
• A further streamlined one-page forgiveness application for all PPP borrowers with loans under $150,000

The post Congress Expands Paycheck Protection Program, Authorizes “Second Draw” Loans in 2021 appeared first on Weiss Serota Helfman Cole + Bierman.

As the coronavirus continues to wreak havoc on the economy, many homeowners have been unable to make their mortgage payments. The CARES Act contains provisions to help borrowers, which allows homeowners facing hardship due to the coronavirus pandemic to obtain mortgage forbearance for up to one year.

“Borrowers should understand the lender is not waiving those payments but temporarily suspending the collection of those payments,” said Drew. “Once payments are suspended, the lender is not able to issue negative reporting to the agencies.” As with any major financial decision, he also advised, “If it’s going to be a longer-term program, you could ask your lender if you can restructure the loan.”

Click here to view the full article.

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Importantly, as of this writing, the Act is still pending signature by the President before it becomes binding law.  However, because 1) the PPP Flexibility Act fundamentally overhauls the PPP Loan program, and 2) the President’s approval of the Act appears to be imminent, this information is being provided to aid borrowers who continue facing difficult PPP loan spending decisions.

Key points from the PPP Flexibility Act

• Extends the “Covered Period”: The covered period for the use of PPP loan proceeds has been tripled from eight weeks from loan origination to 24 weeks (or December 31, 2020, whichever comes first);  notwithstanding, current PPP borrowers may still elect to use an eight week covered period
• New “60/40 Rule”: The minimum percentage of PPP loan proceeds used for eligible payroll expenses has been reduced from 75% to 60%, and the corresponding percentage of eligible non-payroll expenses (mortgage interest, rent, and utilities) has been increased to 40% (replacing the previous “75/25 rule”)
• 60% Forgiveness “Cliff”: While the CARES Act previously reduced forgiveness on a dollar-for-dollar basis for spending outside the payroll/non-payroll ratio, the PPP Flexibility Act creates a “cliff” that eliminates all forgiveness if the borrower fails to meet the 60% payroll spending threshold
• Retroactively applies to all PPP loans (except the maturity date in existing loan documents, which lenders and borrowers can modify)
• Extends loan maturity to five years (previously two years) for all loans made on or after the PPP Flexibility Act becomes law;  explicitly permits current PPP lenders and borrowers to modify existing loans to achieve this extended maturity
• Two additional forgiveness exceptions: A borrower’s forgiveness won’t be reduced or eliminated for failing to restore its pre-pandemic workforce if it can document 1) an inability to rehire employees or find qualified replacement employees, or 2) an inability to restore “the same level of business activity” that it enjoyed before Feb. 15, 2020 due to COVID-19 related operating restrictions (social distancing, health and safety compliance, etc.)
• 10 Months To Seek Forgiveness: A borrower has 10 months from the last day of the covered period to apply for forgiveness, otherwise loan payments begin automatically
• Extends loan deferral period for Borrower’s first loan payment from six months to the time the SBA makes its forgiveness decision
• Extended Safe Harbor to December 31, 2020 to employers seeking to restore full time equivalent employment levels (previously June 30, 2020)
• Eliminates Prohibition on Payroll Tax Deferral: Borrowers may now take advantage of payroll tax deferral under the CARES Act (eliminating the prior restriction applied to PPP loan recipients)

PPP loan borrowers, specifically those approaching the end of their 56 day covered period should be aware of these significant changes and the newfound flexibility in the PPP loan program.  Our firm is ready to assist you in navigating your PPP loan forgiveness issues and advise you with respect to other public and private lending opportunities related to COVID-19’s impact on your business.

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Key points from the application

• Clarifies a $15,385 per individual maximum payment from PPP loan proceeds
• Clarifies that both real and personal property lease payments are eligible non-payroll expenses; i.e. automobile lease payments and equipment lease obligations should qualify for the 25% maximum non-payroll portion
• Specifically includes “transportation, telephone, or internet access” as additional eligible utility expenses
• Creates an elective “Alternative Payroll Covered Period”:  Borrowers with a biweekly or more frequent payroll may choose to delay the start of their 56 day covered period to coincide with payroll cycles
• Clarifies that Eligible Payroll Costs include both “costs paid” and “costs incurred” during the 56 day covered period;  a Borrower may use PPP funds for payroll “costs incurred” (W-2 salary or wages earned in the covered period) after the end of the covered period “if paid on or before the next regular payroll date”;  this suggests that Borrowers who elect not to use an Alternative Payroll Covered Period will need to pro-rate their final payroll to coincide the covered period
• Outlines supporting documentation that must accompany the application
• Borrower must affirmatively designate if its PPP loan exceeds $2 million
• Confirms the June 30, 2020 “FTE Reduction Safe Harbor” deadline by which a Borrower may restore its FTE employee levels to Borrower’s pre-pandemic levels, as measured against  “Borrower’s pay period that included February 15, 2020”

PPP loan funds remain available and lenders continue to accept new applications.  Our team is available to assist you in navigating through the complexities of the PPP loan forgiveness application and advise with respect to other public and private lending opportunities related to COVID-19’s impact on your business.

The post SBA Publishes PPP Loan Forgiveness Application appeared first on Weiss Serota Helfman Cole + Bierman.

Since the Paycheck Protection Program (PPP) went live on April 3, 2020, over four million businesses across the country have been approved for PPP loans across two rounds of federal funding.  Through May 8, 2020, the United States Small Business Administration (SBA) approved over $530B in PPP loans, which are administered through SBA approved lenders.

The PPP loan program has been the subject of significant public scrutiny amid concerns that it benefitted larger companies with questionable need to the exclusion of small business concerns with significant need.  In response, Congress approved a second round of funding for the PPP loan program with an emphasis on smaller lending institutions, and the Treasury Department indicated that it will exercise heightened auditing and oversight over the loans.  In late April, Treasury issued guidance recommending that borrowers revisit their PPP loan certifications of need based on “[c]urrent economic uncertainty” to determine if they were truly eligible to receive the PPP loan. Specifically, Treasury’s responses to FAQ’s 31 and 39 in late April, 2020 “reminded all borrowers” of the need certification requirements and indicated that the SBA will review all loans over $2 million, “in addition to other loans as appropriate.”  These comments, in conjunction with the lack of criteria concerning how need and certifications will be evaluated, has caused uneasiness among borrowers that received PPP loans and began spending those funds weeks ago.

May 13, 2020 Guidance

On May 13, 2020, the Treasury Department issued updated guidance that clarified its position on the above issues and created additional safe harbors to PPP loan recipients.   This guidance should provide meaningful comfort to PPP loan recipients both under and over the $2 million loan threshold.

Loans under $2 million

The first safe harbor benefits small businesses that received a PPP loan under $2 million. Specifically, Treasury indicated that “Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” (FAQ 46).   Essentially, the guidance suggests that 1) small businesses receiving smaller PPP loans were less likely to abuse the program, compelling less scrutiny by the SBA over loan compliance, and 2) the SBA does not wish to expend its “finite audit resources” on smaller balance loans.

Loans over $2 million

While the May 13th guidance confirms that the SBA will review all loans over the $2 million threshold without affording those borrowers a presumption of good faith, the Treasury Department’s guidance offers some latitude to borrowers receiving larger loans.  The guidance appears to soften the Treasury’s prior comments targeted towards larger loan recipients, implying that a borrower’s “individual circumstances” and the language in the SBA guidance and the good faith certification may have created an “adequate basis” for the borrower to seek a PPP loan.   Importantly, where the SBA deems borrowers of these larger PPP loans ultimately lacked an adequate basis to claim a need for the loan, 1) the loan will not be subject to forgiveness and must be paid back, and 2) upon repayment, the borrower will not be subject to “administrative enforcement or referrals to other agencies”.

Safe Harbor to Return PPP Funds

In addition, the updated guidance extended the safe harbor for a borrower to return improperly received PPP loan funds to May 18, 2020. (FAQ 47).   The date was extended from the initial May 7, 2020 deadline due to the timing of the updated guidance.

Questions Remaining

Most importantly, the May 13, 2020 guidance failed to clarify a number of outstanding questions regarding borrowers’ real time PPP loan spending or the mechanics of how loan forgiveness will work. Borrowers and industry trade groups continue awaiting clarification from the SBA concerning issues of how payroll cycles and non-payroll expenses may be adjusted in the eight week (56 day) covered period.  Since the covered period begins on the date the PPP loan is funded by the lender, the timing of the loan often does not coincide with a borrower’s payroll cycle or its ability to meaningfully reopen the business in light of government restrictions.  Additional questions that remain unanswered surround the borrower’s payment of bonuses, pre-payment of rent, and whether cellular phone and internet plans classify as eligible non-payroll utilities eligible for PPP loan spending.

Until specific guidance is issued on these topics, we suggest borrowers continue maintaining meticulous records of PPP loan spending and closely monitoring their compliance with the “75/25 ratio” of payroll to non-payroll expenses during the covered period.

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As the coronavirus continues to jolt the economy, more than 3.4 million Americans are in mortgage forbearance plans, which allows them to pause payments for a month to as long as a year. “The only situation in which the loan interest might change is if the lender extends the loan maturity date or increases the loan interest rate,” Drew said. He points to three key questions borrowers should ask.

• Do I have to pay interest or escrow advances during this time, or is this a complete payment deferral?
• Is the loan maturity date being extended?
• Will the lender recapture the deferred through a balloon payment at loan maturity, an extended maturity date, or some other catch-up method?

“A deferment agreement is a modification and amendment to the loan documents, which requirements a clear understanding of the parties’ respective rights and obligation,” he explains.

Click here to view the full article.

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“Realtors are pivoting away from open houses towards virtual showings, social media advertising and other creative means to connect buyers with suitable properties,” Drew observed. He noted that the use of electronic notarization and recording has also been essential in making transactions secure and convenient.

Drew also discussed COVID-19 related laws like The CARES Act and the Main Street Loan Program, which are designed to keep funds flowing and minimize loan and lease defaults. Drew is a member of the firm’s Real Estate and Banking & Financial Institutions Practice Groups.

Click here to view the full article.

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