NP Connects brings together leaders from a variety of backgrounds to share real-time perspectives on the coronavirus (COVID-19) pandemic. In this conversation, we were joined by guest speakers Dirk Hrobsky, executive managing director at Cushman & Wakefield; Michael Franco, chief executive officer of SitusAMC; Jason Kuhn, retired Navy SEAL and well-known motivational speaker from Stonewall Solutions; and Colette Dafoe and Morgan Nighan, partners at Nixon Peabody.
Latest on PPP
- On Thursday, May 28, the House passed the Paycheck Protection Program (PPP) Flexibility Act; the changes include an extension of the 8-week window to 24 weeks and the 75% rule down to 60%. A Senate vote is anticipated next week.
- The Small Business Administration (SBA) issued its interim final rule on PPP loan forgiveness, which provides some clarity on how certain employment decisions impact forgiveness.
- For example, if an employee voluntarily resigned, requested a reduction in hours, or was terminated for cause, it will not count against loan forgiveness as long as the employer documents in writing.
- Further, if an employer makes a written offer of rehire that is rejected by an employee, it will not count against the employer's loan forgiveness so long as the employer reports that the employee rejected the written offer to their state unemployment insurance office within 30 days.
Update on SBA review process
- New regulations indicate that the SBA has the discretion to review any loan that it chooses regardless of the $2M threshold. The FAQ still indicates that loans under $2M will be deemed to have made their certification in good faith, but the SBA can still review your file if it chooses to do so.
- The SBA will notify the lender, and the lender will have six days to notify the borrower that the SBA is exercising its right to review the loan. The SBA will review how you accounted for the loan amount, how you used the proceeds, and how you calculated the forgiveness.
Impact on the real estate market
- The PPP has been a major benefit to the commercial real estate market due to the 25% that can be applied to rent or mortgage payments. These programs will further impact the real estate market, but it remains to be seen just what that will look like.
- Over the last several weeks, we've heard many reflect back on the financial crisis of 2008/2009. However, this is a much different situation than 2008/2009. The size, scale, and duration are like nothing we've seen before. In 2008/2009, lenders had an appetite for enforcement. Right now, given the pandemic, there's a 90-day forbearance, but when we get to the end of this 90-day forbearance, we will be watching to see what type of appetite lenders have to enforce remedies and foreclose. We expect to see a lot of loan modifications.
- The future of commercial real estate will depend on how long we're in this situation. The longer we're in this situation, the deeper the impact will be, and the harder it will feel. While it is extremely unpredictable, there is a cautious optimism that exists now that didn't in 2008/2009.
Motivating and managing your workforce in a remote environment.
- Managing and motivating a remote workforce is challenging; communication is of utmost importance. Good leaders set clear performance expectations and communicate those standards effectively with their teams.
- It is important to set aside time to regain the personal interaction that is lost during a remote work environment. Check in on your colleagues, schedule virtual meetups, and continue to connect with your teammates.