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COVID CMBS Survey 5.1

The Latest Updates on the PPP

The Small Business Administration, together with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application, including detailed instructions on how to complete it. The form provides insight to borrowers on how to apply for forgiveness of their PPP loans. Additionally, SBA will soon issue guidance to further assist borrowers as they complete their loan applications, and advise lenders of their responsibilities.

Two New Bills Introduced That Address Fixes to the PPP

  • PPP Deadline Extension Adjustment for Loans (DEAL) Act [Romney, Manchin, Leahy, Gardner, Wyden]: The PPP DEAL Act, introduced last Wednesday, would extend the loan forgiveness period from 8 weeks to 16 weeks, and change the rehiring date from June 30 to 16 weeks after the date of the loan's origination. 
  • Paycheck Protection Program Flexibility Act [Roy (R-TX-21), Phillips (D-MN-03)]: The PPP Flexibility Act, introduced last Friday, would extend the loan terms to a minimum maturity of 5 years; extend the loan forgiveness period to the earlier of 24 weeks after the origination date or Dec. 31, 2020; provide that the loan forgiveness amount would not be impacted if a business is unable to rehire employees or find qualified individuals to hire on or before 12/31/20; prohibit the administrator's limitation of the non-payroll portion of the forgivable loan amount; and delay payment of employer payroll taxes.
 

If you haven’t already, AAHOA encourages those in need of relief to work with their banks to get their applications submitted as soon as possible. Learn more on how you can apply below, and watch this special webcast, “Hotel Owners & COVID-19: How to Complete the PPP Application (SBA Form 2843), a Step-by-Step Guide,” to better understand how to fill out the application.

Hoteliers should also consider taking the Employee Retention Tax Credit, which is a $5,000 tax credit per employee for businesses who have been shut down or experienced a 50% drop in gross receipts. For additional state-by-state relief sources, access CBRE’s COVID-19 Business Financial Relief Hub to learn what other programs are available in your area. 

Additional Updates from the SBA

  • May 19, the SBA posted its latest frequently updated Frequently Asked Questions Document, which includes new guidance (Question 48) for the question, “What is the deadline for lenders to complete the initial SBA Form 1502 reporting process?” In the guidance, the SBA says it’s extending the deadline for lenders to electronically upload the initial SBA Form 1502 reporting information to the later of: (1) May 29, 2020, or (2) 10 calendar days after disbursement or cancellation of the PPP loan.

  • May 18, AAHOA released a summary of recommended fixes to the PPP as a part of the HEROES Act, a $3-trillion COVID-19 relief plan that includes fixes for the CARES Act – among many other Democratic priorities – was approved by the House of Representatives on Friday, May 15, with a vote of 208 to 199. While AAHOA welcomes the changes to the PPP introduced in the bill, it is unlikely to pass in the GOP-controlled Senate. Here you can find a summary of the small-business provisions covered in the new proposed legislation, including PPP coverage periods, rehiring deadlines, loan forgiveness, the cap on non-payroll expenses, and more.

  • May 14, the SBA issued the newest FAQs on its Paycheck Protection Program, which tackles key issues of eligibility, audits, and forgiveness, with newly added FAQ 46 and 47. The new FAQ 46 is welcomed news for borrowers of $2 million or less, as it states these borrowers are assumed to have performed the certifications proving that such funds were necessary. Borrowers with loans more than the $2 million threshold “may still have an adequate basis” for making the required good-faith certification in light of individual circumstances; however, there is no further guidance at this time on what would constitute an “adequate basis” for the certification. The SBA indicated “all” loans more than $2 million will be subject to review, whereas prior guidance suggested these would be reviewed only upon an application for forgiveness. Also notable is new FAQ 47, which extended the deadline (from today, May 14, 2020, until May 18, 2020) for any borrower to return PPP loan proceeds to the lender if the borrower determines it had access to other funds at the time of the PPP loan.

  • The Economic Injury Disaster Loans (EIDL) program portal has reopened, but the SBA is currently only accepting applications from agricultural businesses – much to the disagreement and disappointment from the U.S. Travel Association. Please reference their newly updated EIDL fact sheet for more information.

  • Tuesday, May 5, the SBA and Treasury Department released additional information via their FAQ Document, which now includes FAQ No. 43. This new guidance states that the SBA is extending the repayment date for PPP loans to May 14, for “good faith” or safe harbor certification by the SBA. Borrowers do not need to apply for this extension. This extension will be promptly implemented through a revision to the SBA’s interim final rule providing the safe harbor. SBA intends to provide additional guidance on how it will review the certification prior to May 14.

  • Sunday, May 3, via updates to its FAQ document, the SBA and Treasury Dept. confirmed that PPP borrowers who attempt to rehire employees that were laid off will not have their loan forgiveness amounts reduced if those employees decline the offer to return to work. The SBA and Treasury said they would soon issue an interim final rule outlining that a borrower must have documented that they made a good faith, written offer of rehire to the employee for the same wages and number of hours, and include a start date. Employees and employers should be aware that employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation. Borrowers should have a thorough record of all offers made when you go to your financial institution to obtain loan forgiveness. The latest update to the FAQ also provide additional guidance for seasonal employers making borrower certifications to obtain PPP funding.

  • SBA issued a new Interim Final Rule on Disbursements that addresses whether a borrower can take multiple draws from a PPP loan and thereby delay the start of the eight-week covered period; and by when must a lender electronically submit an SBA Form 1502 indicating that PPP loan funds have been disbursed.
  • The Interim Final Rule on Seasonal Employees addresses disparity and ensures consistency in program administration by providing a seasonal employer the option of using any consecutive 12-week period between May 1, 2019, and September 15, 2019, for determining its maximum loan amount.
  • The SBA and Treasury Dept. issued an Interim Final Rule on corporate groups and non-bank and non-insured depository institution lenders, which limits the amount of PPP loans that any single corporate group may receive to $20 million and provides additional guidance on the criteria for non-bank lender participation in the PPP
  • Last week, the SBA released How to Calculate PPP Loan Amounts to assist businesses in calculating their payroll costs for purposes of determining the amount of a PPP loan for which they can apply.

Other Updates

  • May 12 – Speaker Nancy Pelosi (D-CA) proposed H.R. 6800, the Health and Economic Recovery Omnibus Emergency Solutions Act, or the HEROES Act, a $3-trillion COVID-19 relief plan that includes monies for state, local, and tribal communities, a second round of direct economic payments to individual Americans, and fixes for the CARES Act, among many other Democratic priorities. While the House is aiming to vote on the multi-trillion-dollar package as early as Friday, the Senate has no timeline for delivering its own bill, with Senate Majority Leader Mitch McConnell (R-KY) saying they’re still “assessing what we’ve done already.” According to an article published by Politico, the next round of coronavirus relief is likely to happen after the Memorial Day recess, which means a new spending agreement may not be reached until June or beyond. For a summary of the House proposal likely to be voted on this week, click here.
  • May 6 – Senate Finance Committee Chairman Chuck Grassley (R-Iowa) joined senators John Cornyn (R-Texas), Ron Wyden (D-Ore.), Marco Rubio (R-Fla.), and Tom Carper (D-Del.)  to introduce the Small Business Expense Protection Act, which would clarify the SBA’s PPP so small businesses can deduct expenses paid with a forgiven PPP loan from their taxes. "Borrowers should not be penalized by new taxes because they sought help during this unprecedented crisis,” Rubio said.
  • April 30 – IRS Notice 2020-32 provides guidance on the deductibility of expenses paid with PPP loan proceeds that are partially or completely forgiven and excluded from a taxpayer’s income. Specifically, the IRS has determined that otherwise deductible expenses that are paid with PPP funds and forgiven may not be deducted for federal income tax purposes. 

  • April 29 – Establishing Dedicated Hours for Small Lender Submissions of PPP Applications: “In order to ensure special access to the PPP loan program for the smallest lenders and their small business customers, the SBA is only accepting loans from lending institutions with asset sizes less than $1 billion from 4 p.m. EDT until 11:59 p.m. EDT on April 29, 2020.”
  • April 28 – The Review Procedure for PPP Loans: “To further ensure PPP loans are limited to eligible borrowers, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million.”

How to Apply

  1. Read the fact sheet
  2. Determine eligibility
  3. Understand FAQ
  4. Fill out the PPP Borrower Application and IRS Form 941
  5. Find an approved lender and work with them to apply

PPP Resources 

Needed Documents

Highlights

  • Small businesses with 500 or fewer employees are eligible.
  • You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. A list of participating lenders, as well as additional information and full terms, can be found at www.sba.gov.
  • AAHOA recommends that all potential applicants consult with their bank, accountant, attorney, and/or other advisor so you understand how the loan may be used to both maximize loan forgiveness and minimize potential liability.


AAHOA Member Financial Institutions* Participating in the Paycheck Protection Program

*Please note, the following financial institutions are only accepting current/existing customers


CLUB BLUE MEMBER

Mag Mile Capital
Julia Pratt
312-640-7430
jpratt@magmilecapital.com
www.magmilecapital.com/sbaloans
Learn about Mag Mile's latest initiative with PPP loans

ALLIED MEMBER
Creative Lending Solutions
Prajesh N. Patel
847-278-7310
ppatel@clsolutionscorp.com
www.clsolutionscorp.com

ALLIED MEMBER
Customers Bank
Tiffany Kidd
903-363-3848
tkidd@customersbank.com
www.customersbank.com/disaster

ALLIED MEMBER
Fountainhead Commercial Capital
Chris Hurn
407-233-1504
chris@fountainheadcc.com
www.fountainheadcc.com/ppp

ALLIED MEMBER
Live Oak Bank*
Jamie Bourgeois
910-375-5925
jamie.bourgeois@liveoakbank.com
www.liveoakbank.com/paycheck-protection-program-sign-up
*If you are not a current Live Oak Bank customer, you can fill out this form to be notified by email once they have opened up the program to other businesses that are not current customers. 

ALLIED MEMBER
PHD Financial
Paul Darrow
561-508-7558, ext. 1
paul@phdfinancialllc.com
phdfinancialllc.com

CMBS Resources & Links

April 29: AAHOA President & CEO: Leaders in Washington Must Act to Provide Immediate Liquidity

In an op-ed published today on Hotel Management, AAHOA President & CEO Cecil P. Staton addresses how the PPP does virtually nothing to help small-business owners pay commercial mortgages. “Owners trying to stay current on or renegotiate commercial mortgage-backed security loans face a series of obstacles that could not only end up killing their businesses but also upend the fixed income market,” Cecil writes. “A series of CMBS loan defaults would create a significant market disruption that could negatively impact pension plans and other consumer-facing investment vehicles.”

Contribute Your Thoughts to our Latest Survey on CMBS Loans

AAHOA would like to hear about how you are handling your CMBS loans during the COVID-19 pandemic, including requests, communication, and forbearance. Our latest questionnaire should take less than 10 minutes to complete, and your feedback on CMBS loans will help guide our outreach efforts to the appropriate elected officials and agency employees.

Take Our Brief Survey

The CARES Act: Information for America's Hotel Owners

The CARES Act provides small businesses with immediate liquidity, which will address the need for capital used to make payroll and cover operating expenses. AAHOA applauds Congressional leadership for expediting this critical relief package. The passage of the CARES Act provides AAHOA’s advocacy team an opportunity for further conversations with the Trump administration and Congressional leadership regarding the necessary assistance small businesses need to weather this national pandemic.   

We are expecting additional relief packages in the coming weeks as our government responds to the economic crisis sparked by COVID-19, and AAHOA is dedicated to advocating on behalf of America’s hoteliers throughout the duration of this legislative process.

CARES Act Resources

CARES Act FAQ Courtesy of U.S. Travel Association 

Where do I apply for each type of grant or loan? Are they all available to apply for now?

Some of the new loan features are available, some are not. To find the most up to date information, please visit the SBA here. You can use the site to find where to apply for the loans, but in general:

  • SBA Economic Injury Disaster Loan: Apply with the SBA here.
  • SBA Interruption Loan (Paycheck Protection Program): Apply through an authorized Bank or Credit Union beginning either April 3 or April 10, depending on your eligibility category. More information is available here. You can find the list of SBA-approved lenders in each state or region here.

What is the cap on each different type of loan?

Actual loan amounts are based on need (e.g. expenses, payroll, etc) and other requirements (e.g. collateral, risk, etc.), but the maximum size for each loan is:

  • SBA Economic Injury Disaster Loan: $2 million
  • SBA Interruption Loan (Paycheck Protection Program): $10 million

Do you have to pick and choose one between the Disaster Relief Loan and the Paycheck Protection Program loan? Or can I apply for both?

No, but they generally can’t be used to cover the same expense. Since Economic Injury Disaster Loans are available now, they should be the first choice for relief. An Economic Injury Disaster Loan can be folded into a Paycheck Protection Loan (Interruption Loan), but not vice versa. The Paycheck Protection Program is designed to be supplemental to the Economic Injury Disaster Loan program, covering expenses that can’t be covered by an Economic Injury Disaster Loan alone.

How soon could I expect relief from each type of loan?

Turnaround times may vary, but based on history:

  • SBA Economic Injury Disaster Loan: 2-3 weeks for the full loan, but 3 days for $10,000 cash advance.
  • SBA Interruption Loan (Paycheck Protection Program): N/A, new program

Advocacy Banner

CARES Act Resources and FAQs from the U.S. Travel Association

After the CARES Act was enacted, many hoteliers have questions as it relates to eligibility, provisions, and next steps. The U.S. Travel Association has compiled extensive resources on its CARES Act page, including a CARES Act webinar recording, which can be accessed here (alternatively, you can also view the full slide deck).