Jessica T. Zolotorofe

ANSELL GRIMM & AARON NEWSLETTER NOVEMBER 2021

Jennifer Krimko Secures Variance for New Tesla Gallery and Service Facility

Jennifer Krimko, a Shareholder and Co-Chair of the Firm’s Land Use and Zoning Department, recently represented the property owners for the upcoming Tesla automobile gallery and factory-authorized service facility in Eatontown. The project required approval by the Eatontown Zoning Board of Adjustment because car sales are not permitted in the borough’s zoning rules. In addition to the selling and servicing of electric vehicles, the store will provide a free-standing charging station open to the public along the Route 35 corridor.

 

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Client Alert: The Enforceability of Waivers From Automatic Bankruptcy Stays

In light of the COVID-19 pandemic, the risk of commercial tenants filing for bankruptcy protection has risen substantially.  A concern for many commercial landlords is whether avenues exist for protecting their ability to initiate an action against tenants when they default on their lease obligations and file for bankruptcy protection.

Below is a syllabus of the lightly-developed case law addressing whether waivers from automatic bankruptcy stays are enforceable, and the means by which landlords and their tenants can enter into such agreements.  It is important to note, however, that the courts have not ruled on many cases during the pandemic and applicable case law may be in flux.

 

Enforceability of Bankruptcy Stay Waivers Contained in Forbearance Agreements

Pursuant to an Executive Order issued by New York Governor Cuomo, a statewide eviction moratorium on residential and commercial evictions has been extended to August 20, 2020, for tenants who qualify for unemployment benefits or who are experiencing a “financial hardship” as a result of COVID-19.  Landlords may serve rent demands, but cannot commence litigation against tenants, such as eviction actions.  Similarly, New Jersey Governor Murphy issued an Executive Order setting a moratorium on residential evictions and foreclosures in New Jersey — though the New Jersey Executive Order contains language clarifying that commercial tenants are not subject to the moratorium.  The New Jersey moratorium will last until two months after Governor Murphy declares an end to the COVID-19 health crisis, unless the Governor issues another Executive Order to end the moratorium sooner.

In light of the present circumstances, it may be advisable for commercial landlords to work with their tenants to enter into forbearance agreements (as opposed to lease amendments) containing a waiver from the automatic bankruptcy stay.  The agreements should make clear that the tenant is in default, that the agreement is being entered into as a result of the default, and that the landlord is deferring/forgiving rent, and forbearing from eviction (or whatever the consideration may be) in exchange for a waiver of the automatic stay.

While the case can be made that pre-bankruptcy agreements with tenants via a lease amendment may be enforceable, the more secure means to accomplish this is in the form of a forbearance agreement.  In In re Velez, the court rejected landlord’s attempt to enforce a general waiver to escape the automatic stay, distinguishing general waiver language in a lease amendment from a forbearance agreement “whereby the debtor specifically waived future protections of the automatic stay.”  In re Valez, 601 B.R. 351, 364 (Bankr. M.D. Pa. 2019).

In In re Frye, 320 B.R. 786 (Bankr. D. Vt. 2005), the court set forth certain factors to be utilized in deciding whether relief from the stay should be granted.  The court also noted that it considered additional factors in making the determination that a waiver is enforceable, including:  (1) the sophistication of the parties; (2) the presence of counsel; (3) consideration for the waiver; (4) the length of waiver period; (5) the risks and concessions assumed by lender/landlord; (6) the effect on other stakeholders in the Bankruptcy; (7) any defenses to the waiver, such as mistake or fraud; (8) the impact of the waiver on the feasibility of Debtors’ plan; (9) whether enforcement of the waiver would promote public policy of out of court settlements; (10) prejudice to landlord/lender for non-enforcement; (11) the time gap and change in circumstances between date of waiver and bankruptcy filing; and (12) whether the landlord/lender would otherwise be entitled to relief from the automatic stay. 

 

Conclusion

As many courts are closed and this is new territory, we expect the case law may evolve as litigations progress on this novel issue.  Arguments for the enforcement of waivers from automatic bankruptcy stays may be successful, depending on new rulings as they are issued and the specific language in the forbearance agreement executed by landlords and tenants.  Landlords and tenants alike are advised to consult with an attorney experienced in this area to determine viability of such plans and to protect their interests.

Client Alert: Legislative Changes to the Family Leave Act and the WARN Act

Earlier this month, the New Jersey Legislature made further changes to the state’s labor and employment laws in light of the COVID-19 pandemic.  In particular, the Legislature amended the Family Leave Act and the Millville Dallas Airmotive Plant Job Loss Notification Act (commonly known as the “NJ WARN Act”).  These changes directly impact the rights of both employers and employees throughout the state.  A brief summary is provided below:

 Family Leave Act

On April 14, 2020, Governor Phil Murphy signed Senate Bill S2374 (“S2374”) into law.  Among other things, S2374 amended the New Jersey Family Leave Act to provide job-protected leave when the Governor has declared a state of emergency.  In these circumstances, an employee who needs to care for a family member because of (1) an epidemic of a communicable disease, (2) a known or suspected exposure to a communicable disease, or (3) efforts to prevent the spread of a communicable disease to other members of the community is entitled to twelve (12) weeks of job-protected leave. 

The Family Leave Act defines a “family member” to mean “a child, parent, parent-in-law, sibling, grandparent, grandchild, spouse, domestic partner, or one partner in a civil union couple, or any other individual related by blood to the employee, and any other individual that the employee shows to have a close association with the employee which is the equivalent of a family relationship.”

While the Family Leave Act normally allows an employer to deny leave to the highest-paid 5% of its employees, or the seven highest paid employees (whichever is greater), subject to certain conditions being met, this exemption is suspended when the Governor declares a state of emergency and the leave requested is for one of the three reasons set forth above.  In addition, an employee may take intermittent leave for epidemic-related reasons without the employer’s consent so long as the employee (1) provides prior notice to the employer as soon as practicable and (2) makes a reasonable effort to not unduly disrupt the employer’s business operations.

The amendments to the New Jersey Family Leave Act contained within S2374 went into effect immediately and are retroactive to March 25, 2020.

NJ WARN Act

In 2019, the Legislature amended the NJ Warn Act to require that covered employers pay severance to employees that are terminated in connection with a covered event (the “2019 Amendment”).  The 2019 Amendment was scheduled to become effective on July 19, 2020.

In light of the pandemic, the Governor signed S2353 into law on April 14, 2020.  S2353 delays the effective date of the 2019 Amendment from July 19, 2020, until ninety (90) days following the termination of Executive Order 103 of 2020, wherein the Governor declared a state of emergency and a public health emergency.  At the time of publication, the Governor has indicated Executive Order 103 will not be terminated before May 15, 2020 and, therefore, the 2019 Amendment to the NJ WARN Act will not go into effect until August 15, 2020, at the earliest.

S2353 also amended the definition of a “mass layoff” to exclude layoffs “made necessary because of a fire, natural disaster, national emergency, act of war, civil disorder[,] or industrial sabotage[.]”  The definitional change is retroactive to March 9, 2020.

Trade Group Calls on Ansell.Law to Address Legal Concerns Relating to COVID-19

The unprecedented events and dynamic changes necessitated as a response to COVID-19 have left many businesses grasping for a way to get a handle on the current situation. The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) turned to Ansell Grimm & Aaron PC’s Joshua Bauchner and Rahool Patel to get some guidance.

 The attorneys conducted a virtual discussion with the trade group addressing various issues and responding to members’ inquiries regarding the CARES Act, the Paycheck Protection Program (PPP), and insurance and landlord/tenant concerns.

 The effort was well received and recently written up in the latest issue of Body Shop Business, the industry’s trade journal.

 “Because of the many complicated requirements that must be met on the applications, I strongly recommend that members obtain the assistance of professionals like the people from Ansell Grimm & Aaron, PC rather than deal with it on their own,” AASP/NJ Executive Director Charles Bryant, told the publication.

 The Ansell Grimm & Aaron COVID-19 Task Force will be conducting a free small business webinar on Thursday, April 30 at 11 a.m.

 Topics will include:

  •       New and pending legislation
  •       PPP program
  •       Lease obligations
  •       Insurance claims
  •       Employee concerns

 To join the meeting via Zoom:

 Meeting ID: 953  0659  1428

Password: 020438

Client Alert: The CARE Act – Paycheck Protection Plan Updates

On April 3, 2020, the federal government unveiled the Paycheck Protection Plan (PPP), an undertaking intended to assist small businesses through the COVID-19 pandemic by providing them loans, and at the same time, incentivizing keeping employees on the payroll.

What Businesses Qualify for Loans?

The loans are available from existing SBA lenders to businesses with 500 or fewer employees starting April 3, 2020, although businesses with more than 500 employees in particular industries are potentially eligible if they meet the SBA’s size standards for those industries. Included are sole proprietorships, independent contractors, self-employed individuals (although they only can apply for loans beginning April 10, 2020), and private non-profit organizations or 501(c)(19) veterans organizations affected by COVID-19.  Additionally, small businesses in the hospitality and food industry with multiple locations also might be eligible if their individual locations employ less than 500 employees.

Loan Terms and Forgiveness

The PPP loans are on a first-come, first-served basis in an amount up to two months of the average monthly payroll costs for 2019 with a $10 million cap. The interest rate is fixed at 1% for a two year term with all loan payments deferred for 6 month, though interest will continue to accrue over this period. There is no collateral or personal guarantees required and neither the government nor the lenders will charge small businesses any fees. Other terms and conditions of loans continue to be worked out between lenders and the government so it is recommended that employers continue to follow updates. So long as employees remain on the payroll for eight (8) weeks and the loan proceeds are used for payroll, rent, mortgage interest, or utilities, the SBA will forgive the loans. However, due to the likelihood of high subscription, at least 75% of the forgiven amount must have been used for payroll. If employers decrease the number of full-time employees, or decrease salaries and wages by over 25% for any employee making less than $100,000 annually in 2019, the amount of loan forgiveness will be reduced.

Basically, there is no real downside to receiving a loan through this program, but employers should be diligent in keeping accurate records of how loan proceeds are being spent over the term of the loan; specifically, the amount of the loan being used for the various payroll costs.

What Records Should Employers Collect to Apply for a Loan?

In order to seek a loan, employers should obtain records of:  (i) their complete 2019 payroll; (ii) their 2019 independent contractor costs; (iii) their payroll report as of February 15, 2019 or closest date thereafter; (iv) four 2019 quarterly 941 payroll returns; (v) twelve monthly payroll summaries by employee and company totals for April 2019 through March 2020; (vi) proof of health insurance premiums and retirement plan contributions paid by the company from April 2019 through March 2020; and (vii) a fully initialed and signed federal PPP loan application.

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The information provided in this alert was up-to-date at the time of publication, is provided for general purposes only and does not constitute legal advice, and the transmission and receipt of this information does not create or constitute an attorney-client relationship.

Client Alert: Coronavirus (COVID-19) and Business Interruption Claims

Numerous companies are facing dramatic and unprecedented circumstances as a result of the COVID-19 pandemic. To stay afloat, businesses are being forced to reduce their staffing at varying levels, decrease employee hours and salaries, and unfortunately, in many instances, eliminate staff altogether. In fact, in many states, including New Jersey, businesses deemed “non-essential” have been shut down, inevitably resulting in loss of income to affected businesses. This has led to businesses exploring all avenues to recover losses, including business interruption insurance coverage under their commercial insurance policies.

 

What is Business Interruption Insurance?

Business interruption insurance, also referred to as business income insurance, is a type of insurance that assists in covering lost income due to the disruption of business operations. Common disruptions covered by business interruption coverage include events such as fire, hurricanes, broken water pipes, wind, lightning and earthquakes. Under certain circumstances, business interruption insurance may provide coverage for suspended operations of a business based on an order of or determination by a civil authority resulting in access to the insurance holder’s premises. Lost income is generally defined as the income a business would have realized through its normal operations but for the business being disrupted, including operating expenses and payroll.

 

Does Business Interruption Insurance Provide Coverage Due to Loss of Business Income Due to COVID-19?

Business Interruption Insurance coverage is based on the language contained in commercial insurance policies, which can vary from one policy to the next, as well as the law governing the interpretation of the applicable policy provisions. Those perils specifically enumerated in the policy for which coverage is afforded will provide the basis for any such determination. In order to determine whether business interruption coverage is available under the employer’s policy for COVID-19, particular attention should be paid to such issues as whether the business voluntarily imposed restrictions resulting in income loss, whether the business was closed due to local, state or federal order or whether the business was permitted to remain in operation on a limited basis subject to restrictions. The policy might also contain a virus exclusion provision, so it is important to review the policy for any such provision to determine how it might affect coverage determinations.

 

What Steps Should Employers Take to Determine Whether They Have Coverage for Business Interruption?

Since coverage will be guided by the company’s commercial insurance policy, it is essential to carefully review the policy, and it is highly recommended that the companies consult with legal counsel in order to determine whether filing a claim for business interruption is an option.

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The information provided in this alert was up-to-date at the time of publication, is provided for general purposes only and does not constitute legal advice, and the transmission and receipt of this information does not create or constitute an attorney-client relationship.

Client Alert: The Applicability Of Force Majeure Clauses In A Pandemic

Many leases contain a force majeure clause which, traditionally, excused performance by the tenant due to extraordinary circumstances or an Act of God. Perhaps not surprisingly, the law is ambiguous as to the effect of a force majeure clause in the face of the current pandemic: in sum, does the pandemic permit invocation of the clause to excuse performance?

Below is a syllabus of the law from New York, New Jersey, and Pennsylvania. It is important to note, however, that not all force majeure causes are the same and the particular language of the clause will inform its viability.

New York

New York law defines force majeure as a “clause excusing nonperformance due to circumstances beyond the control of the parties.” Kel Kim v. Central Mkts., 70 N.Y.2d 900, 902 (1987). The law governing force majeure clauses is based on the common law doctrine of impossibility of performance, which is “applied narrowly, due in part to judicial recognition that the purpose of contract law is to allocate the risks that might affect performance and that performance should be excused only in extreme circumstances.” Kel Kim, 70 N.Y.2d at 902. The Court of Appeals in Kel Kim held that impossibility of performance only occurs “when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible” and “the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract.” Id. The Appellate Division in Kolodin found that the impossibility of performance doctrine “is generally limited to the destruction of the means of performance by an act of God, vis major, or by law.” Kolodin v. Valenti, 115 A.D.3d 197, 200 (1st Dept. 2014).

The Kel Kim holding presents a potential issue in evaluating force majeure clauses, in that the Court of Appeals held that ordinarily a party’s performance only will be excused if the force majeure clause specifically included the event at issue. Kel Kim, 70 N.Y.2d at 902-903. The Appellate Division provided further analysis on this issue in Constellation Energy Services, finding:

Force majeure clauses are to be interpreted in accord with their purpose, which is to limit damages in a case where the reasonable expectation of the parties and the performance of the contract have been frustrated by circumstances beyond the control of the parties. When the parties have themselves defined the contours of force majeure in their agreement, those contours dictate the application, effect, and scope of force majeure.

Constellation Energy Servs. of N.Y. v. New Water St., 146 A.D.3d 557, 558 (1st Dept. 2017). Courts also generally have enforced force majeure clauses when the subject contracts include “epidemic” as a specific example of a contractual force majeure event. See Wyndham Hotel Grp. Int’l, Inc. v. Silver Entm’t LLC, No. 15-CV-7996 (JPO), 2018 WL 1585945 (S.D.N.Y. 2018) (citing a contract that defined a force majeure as “acts of God, strikes, lockouts or other industrial disturbances, war, terrorism, riot, epidemic, fire or other catastrophe…”) (emphasis added).

Indeed, there is a limited scope for exercising force majeure clauses under the laws of New York. Landlords and tenants alike should review their leases to determine whether pandemics are included in the definition of force majeure, to the extent their leases contain a force majeure clause. To the extent pandemics are not included in the definition, tenants may face an uphill battle in attempting to excuse lease performance due to the COVID-19 pandemic.

 

New Jersey

While New York has a far more developed body of case law on this issue, New Jersey courts also have evaluated the applicability and enforceability of force majeure clauses. In Facto v. Pantagis, the Supreme Court held that a force majeure clause “provides a means by which the parties may anticipate in advance a condition that will make performance impracticable.” 390 N.J. Super. 227, 231 (2007). The Supreme Court appears to have set forth a somewhat more liberal standard than in New York, finding that “performance would be excused if prevented … by an act of God (e.g., flood, power failure, etc.), or other unforeseen events or circumstances.” Id. A strong argument certainly can be made that the COVID-19 pandemic constitutes an unforeseen event or circumstance.

Further, the Appellate Division in 476 Grand, LLC held that New Jersey courts “recognize that performance under a contract may be excused by supervening events that make performance impractical after the contract is made.” 476 Grand, LLC v. Dodge of Englewood, Inc., No. A-2048-10T1, 2012 WL 670020, at *2 (App. Div. 2012). The Appellate Division cited the Restatement (Second) of Contracts §§ 261–72 (1981), in finding that “an obligor may contract for a lesser obligation through clauses limiting it, such as a clause reserving a right to cancel or a force majeure clause.” Id.

If a force majeure clause is included in a contract and an pandemic occurs, an argument can be made under New Jersey law for invoking the clause. Considering the less-developed body of case law on this issue, Landlords are in a position to argue that the law in surrounding states ought to guide the analysis, and that tenants are not excused from performance due to the COVID-19 pandemic. Tenants, likewise, are in a position to argue that the COVID-19 pandemic constitutes an unforeseen event or circumstance, excusing performance under their lease.

 

Pennsylvania

The definition of an “Act of God” under Pennsylvania law is “a natural force of such inevitability and irresistibleness that man cannot cope with it, either to predict, forestall it or control it when it arrives. It is also defined as an unusual, extraordinary, sudden and unexpected manifestation of the forces of nature which cannot be prevented by human care, skill or foresight.” Woodbine Auto v. Southeastern Pa. Transp. Auth., 8 F. Supp. 2d 475 (E.D. Pa. 1998). Under this definition, there is a very limited scope for exercising force majeure clauses under Pennsylvania law.

Importantly, “economic difficulty” is specifically excluded as a viable force majeure under Pennsylvania law. In Route 6 Outparcels, LLC v. Ruby Tuesday, Inc., 88 A.D.3d 1224 (3d Dep’t 2011) (applying Pennsylvania law), the Court held that “[e]conomic factors are an inherent part of all sophisticated business transactions and, as such, while not predictable, are never completely unforeseeable; indeed, financial hardship is not grounds for avoiding performance under a contract.”

With regard to property leases in Pennsylvania, unless pandemic events are specifically listed in the subject lease, landlords are in a secure position as the law currently stands.

 

Conclusion

As many courts are closed and this is new territory, we expect the case law may evolve as the courts reopen. Arguments against the consideration of pandemic events as force majeure events may or may not ultimately be successful, depending on new rulings as they are issued. In the event landlords wish to retain tenants facing default after the pandemic emergency passes, it may be worthwhile to consider a deferral or payment plan that allows the tenant to stay afloat while providing the landlord with income to cover expenses. Landlords and tenants alike are advised to consult with an attorney experienced in this area to determine viability of such plans and to protect their interests.

 

Here to Serve You

To best service our clients in response to the COVID-19 pandemic, Ansell Grimm & Aaron, PC created a Task Force comprised of attorneys from various practice areas to digest new legislation and guide our clients through these difficult times. For more information please contact us at Covid19TaskForce@62q.f7d.myftpupload.com.

About Ansell Grimm & Aaron, PC

Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

The information provided in this alert was up-to-date at the time of publication, is provided for general purposes only and does not constitute legal advice, and the transmission and receipt of this information does not create or constitute an attorney-client relationship.

Client Alert: Changes Made in New Jersey and New York Employment Law in response to Covid-19

In response to the COVID-19 pandemic, lawmakers in New Jersey and New York have amended the labor and employment laws of their respective states to provide greater protections to employees during this unprecedented time.  A brief summary is provided below:

 

New Jersey

On March 20, 2020, Governor Phil Murphy signed Assembly Bill 3848 (“A3848”) into law, which went into effect immediately.  A3848 prohibits all New Jersey employers for the duration of the Public Health Emergency and State of Emergency (set forth in Executive Order 103 of 2020) from terminating or otherwise penalizing an employee who requests to take or takes time off from work based on the recommendation of a licensed medical professional because the employee has, or is likely to have, an infectious disease.  In addition, an employer may not refuse to reinstate the employee to the position he or she held at the time of taking leave and may not reduce any of the employee’s terms of employment (e.g., seniority, status, benefits, pay, etc.)

A3848 provides that an employee may file a complaint with the Commissioner of the Department of Labor and Workforce Development (“Commissioner”) or initiate a lawsuit in the Superior Court of New Jersey when a violation has occurred.  In the event that the Commissioner or a court finds, by a preponderance of the evidence, that A3848 was violated, the employee must be reinstated to his or her position and the employer will be fined $2,500.

 

New York

On March 18, 2020, Governor Andrew Cuomo signed Senate Bill 8091 (“S8091”), which also went into effect immediately.  S8091 mandates that most New York employers provide paid sick leave to an employee who is subject to a mandatory or precautionary order of quarantine or isolation issued by the state, the New York Department of Health, a local board of health, or any other governmental entity authorized to issue such an order due to COVID-19.  The amount of paid sick leave required depends on the number of employees (as of January 1, 2020), annual revenue, and type of employer as follows:

 

  • All public employers in the State of New York, including municipal governments and school districts: 14 paid sick days.
  • Employees with 100 or more employees: 14 paid sick days.
  • Employers with 11 to 99 employees: 5 paid sick days.
  • Employers with 10 or fewer employees and over $1 million in net income in 2019: 5 paid sick days.
  • Employers with 10 or fewer employees and $1 million or less in net income in 2019: No paid sick days required but employee is entitled to use state paid family leave and disability benefits.

 

When less than fourteen (14) days are provided, S8091 allows the employee to claim state paid family leave and disability benefits upon the exhaustion of his or her allotted number of paid sick leave days.

S8091 also provides that it shall be unlawful for an employer to discharge, threaten, penalize or in any other manner discriminate or retaliate against any employee who uses leave in accordance with the law.

 

Here to Serve You

To best service our clients in response to the COVID-19 pandemic, Ansell Grimm & Aaron, PC created a Task Force comprised of attorneys from various practice areas to digest new legislation and guide our clients through these difficult times.  For additional information, please visit 62q.f7d.myftpupload.com.

 

About Ansell Grimm & Aaron, PC

Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

 

The information provided in this alert was up-to-date at the time of publication, is provided for general purposes only and does not constitute legal advice, and the transmission and receipt of this information does not create or constitute an attorney-client relationship.

Client Alert: What to Expect from the CARES Act – The Paycheck Protection Program

While we are facing a global crisis in connection with the Coronavirus, or COVID-19 pandemic, life as we know it has been significantly disrupted. Small businesses are struggling to stay afloat, especially those that have been made to work remotely, close their doors entirely, or substantially limit their business operations by order of state and local governments.

There may be help on the horizon, however. Congress has passed the $2 trillion dollar Coronavirus Aid, Relief, and Economic Security (CARES) Act in an attempt to minimize the inevitable impact that COVID-19 has and will have on small businesses.

While the Act is very in-depth, there is one section that may be particularly useful to small business owners. The Paycheck Protection Program (“PPP”) has set aside $349 billion for loans that will allow small businesses, which were in operation on February 15, 2020, to retain their employees by covering the cost of payroll amongst other permitted costs.

What costs are permitted under the PPP?
Subject to certain exclusions, costs permitted under the PPP include employee payroll; commissions and cash tips; vacation, parental, family, medical or sick leave; health care premiums; interest on mortgage or other debt obligations; rent under lease agreements; and utilities.

When should I apply?
Loans are only available at this time until June 30, 2020, so prompt application is advisable.

Who do I apply to for a PPP loan?
Loans will be made by lenders who currently provide SBA 7(a) loans, as well as new lenders (both public and private) that the SBA is working quickly to qualify. Forgiveness will also be applied for through the lender.

Who is eligible for a PPP loan?
In order to qualify for a PPP loan, the business (including standard businesses, non-profits, veterans organizations and tribal businesses) has to have fewer than 500 employees, or, according to the SBA, the “applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.” Also, any business that employs 500 or less people per location and has an NAICS code beginning with 72 is eligible. Independent contractors and certain self-employed individuals may qualify for PPP loans, as well.

What are the terms of a PPP loan?
Under the PPP, the maximum loan amount is 250% of the average monthly payroll costs, not to exceed $10,000,000. The goal is to provide businesses with eight weeks’ worth of permissible expenses. For those amounts not otherwise forgiven, the loan term can be up to ten years with an interest rate no higher than 4%. Principal, interest and loan fees will all be deferred for a minimum of six months and a maximum of twelve months. No collateral or personal guaranties may be required in connection with a PPP loan.

What makes a PPP Loan eligible for forgiveness?
PPP Loans are eligible for forgiveness if all employees are retained (or rehired by June 30, 2020). Loan forgiveness will be reduced by the amount that payroll decreases for employees with salaries less than $100,000 per year, if that decrease exceeds 25%. The lender must render and notify the business applicant of a decision within 60 days of the forgiveness application submission.

For more information on the Paycheck Protection Program and to determine your company’s eligibility, please contact us at Ansell Grimm & Aaron, PC at covid19taskforce@62q.f7d.myftpupload.com.

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The information provided in this alert was up-to-date at the time of publication, is provided for general purposes only and does not constitute legal advice, and the transmission and receipt of this information does not create or constitute an attorney-client relationship.

Jessica Zolotorofe discussed alternative financing arrangements for commercial real estate properties

LoopNet reported on owner-financing (also called seller-financing), a complex alternative to the traditional financing, and some of the factors to consider before exploring owner-financed deals including terms, due diligence, tax advantages and income.

Ansell Grimm & Aaron attorney Jessica T. Zolotorofe shared why it’s essential to consult a lawyer before finalizing any owner-financed deal and the importance of having good contract terms for both buyers and sellers. Zolotorofe devotes her practice to real estate transactions, including buying, selling, leasing and financing commercial properties.

Read the LoopNet article here.