Coronavirus: Paycheck Protection Program Application Form Out!
PPP APPLICATION FORM OUT!
The Treasury Department has just issued the form of Application for Paycheck Protection Program applications. The form of application is attached to this E-Mail, together with guidance from Treasury for prospective Borrowers.
Who to Believe? The Borrower’s Guidance accompanying the application states that loans will have a maturity of two years and an interest rate of .5%. The Guidance adds, “Due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll.”
These statements preempt the text of the law, which provides that the loan can have a ten-year maturity date and a maximum interest rate of 4%, and imposes no limitations on the amount that must be used for payroll. We assume that the Treasury guidelines will prevail, but await reaction from lenders.
Use an Experienced Lender. Certain lenders, including many banks, have long experience making SBA loans. Do not just go to the website that promises “fast action.” Some lenders may take your information with a promise to get in touch with you when applications are issued (e.g., pursuitlending.com, a longstanding SBA lender run by a consortium of New York banks). Check with your local bank to find out if they are qualified to take yours.
By this time, summaries of the PPP abound. One good one is the Small Business Owner’s Guide to the CARES Act, put out by the U.S. Chamber of Commerce: https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf
Do NY Homeowners Associations Qualify? On one hand, they are “business concerns” like any other real estate owner. On the other hand, the CARES act specifies that only IRS 501(c)(3) non-profits can apply. Many HOA’s were organized under the “Not-for Profit Corporation Law,” but are not 501(c)(3) charitable entities. Are they inadvertently excluded?
Other Coronavirus News
A. Landscaping back out as “essential.” The state Agriculture website, last updated on March 31st removed landscaping as an “essential service.” (The Coronavirus landscape changes day by day!) However, maintenance related to “health and safety”, such as pest management, is still permitted. We are advised by a credible source that new guidance on what constitutes an “essential service” in the horticultural arena will be coming out, hopefully by the end of the week. Townhome communities and HOA’s please take note.
B. Will the Government Allow Owners to Defer Payment of Common Charges, Maintenance and Assessments? Several lawmakers have introduced federal legislation modifying the Fair Debt Collection Practices Act to forbid collection of “consumer debts” for 90 days. The proposed legislation does not distinguish maintenance and common charges from other types of debts. Obviously, to allow owners not to pay their maintenance/common charges for three months would devastate our condos and co-ops. We will keep you advised on the progress of this legislation.
We will continue to keep you updated as the governmental response to the COVID-19 epidemic evolves. Please stay safe and healthy in the meantime!