CARES Act Questions for the Real Estate and Construction Industry – Update #4 |

CARES Act Employment Considerations

CARES Act Lending Programs: Small Business Lending

CARES Act Lending Programs: Midsized Business Lending

CARES Act Tax Considerations

Congress recently passed the economic stimulus package referred to as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act1”), the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCE Act”), and the Paycheck Protection Program Flexibility Act (“PPP Flexibility Act”) (together, the CARES Act1, PPPHCE Act, and PPP Flexibility Act are called the “CARES Act”). The CARES Act is important to certain real estate businesses because it offers necessary financial relief during this unprecedented time. Understanding the available loans and grants, tax provisions, and employment considerations available under the CARES Act could have a tremendous impact on real estate businesses as they make business-critical decisions about their workforce and the continuation of their businesses. As further information becomes available about financial relief offered under the CARES Act, we will update this post.

What are the key provisions in the CARES Act that impact the real estate and construction sector?‎

The CARES Act establishes a new temporary lending program for small businesses (Note: As discussed below, “passive” real estate businesses are ineligible), extends the Economic Injury Disaster Loan (“EIDL”) program and allows for advances, and ‎includes new items relevant to unemployment insurance.‎ In addition, changes in tax rules relating to deductions against non-business income may have substantial benefits to persons holdings ownership interests in pass-through entities, which are common in real estate ownership and fund structures. ‎

Is there relief for borrowers under federally backed multifamily loans?

Yes. In addition to the items above, Section 4023 of the CARES Act specifically provides for 30 days of payment forbearance, with the opportunity for two additional 30-day extensions (for a total of 90 days), to borrowers under federally backed multifamily mortgage loans (excluding construction loans) that are experiencing a financial hardship due to COVID-19. Qualifying loans are generally loans that are secured by multifamily real estate (five or more units) and issued under a federal loan or housing program or that are purchased or securitized by Fannie Mae or Freddie Mac. To be eligible, a borrower must have been current on payments as of February 1, 2020, and will be restricted from evicting tenants based on a failure to pay rent and from charging late fees.

CARES Act Employment Considerations

The CARES Act made federal funds available to states that enter into agreements with the federal government to increase their weekly unemployment benefits and added additional funds available if states eased some of…

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