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PPP Loan Forgiveness for Real Estate Developers

On Monday, November 16th, 2020, Nancy Cox, Partner in our Buffalo Commercial Audit Department and leader of the Firm’s Real Estate Practice, led a panel presentation and discussion with PPP expert panelists Steve Turner, Principal in our Buffalo Commercial Audit Department, Rick Wojciechowski, Partner in our Buffalo Tax Department, and Paul Hoffman, Lender Relations Specialist with the US SBA.

As the covered period for qualifying spending winds down for recipients of PPP loans, developers and Real Estate professionals are moving their attention to the forgiveness process. This panel presentation covered the steps and considerations for applying for and receiving forgiveness.

Below are some key takeaways from the presentation:

Contact your PPP lender and complete the correct forgiveness form:

  • 3805S – For loan amounts under $50,000.
  • 3508EZ – For borrowers that can make 1 of 2 certifications (relating to not reducing their headcount or pay for employees, or relating to not being able to operate at full levels during their covered period due to governmental restriction).
  • 3508 – The full-length forgiveness form.

Calculate your forgiveness and compile your documentation

  • You’ll need to substantiate your qualifying payroll and non-payroll expenses paid during your Covered Period (bank account statements, tax forms, payment receipts, etc).
  • Calculate your total qualifying spend.
  • Don’t forget to apply expense caps to those employees making over $100,000 annualized or to owner employees.
  • Calculate your FTE using one of 2 methods and compare it to one of 2 comparison periods.
  • Consider counting and documenting employees you were unable to rehire.
  • Consider the effect of qualifying expenses over your original loan amount compared to a reduction in headcount.
  • The possibility of full forgiveness remains even if your comparative FTE headcount was reduced.
  • Work with your advisor/CPA to maximize your forgivable loan amount calculation.
  • Don’t forget to reduce your forgiveness by any EIDL grant amounts you’ve received ($1,000 per employee up to $10,000).

Apply to your lender for forgiveness

  • Provide additional documentation if requested after lender review.

Your lender will send your forgiveness application to the SBA for final approval

Receive your formal forgiveness decision!

  • If you disagree with the conclusion, there is a process available to argue the amount.

Borrowers should also work with their advisors to address the following considerations:

  1. Loan over $2,000,000? You may be subject to additional documentation and audit requirements by the SBA. Be prepared with additional loan necessity documentation.
  2. Consider and optimize the tax implications from the forgiveness of your PPP loan (both federal and state implications and the timing of your forgiveness application).
  3. GAAP Accounting has a number of options available to present your PPP loan and subsequent forgiveness.

Communication with your lender and advisors during this process is critical to ensure that each borrower maximizes the impact and benefit to their business while minimizing any surprises and bumps in the road.

A copy of the full presentation deck from the webinar is available for download here.

We hope you found the information valuable and insightful. Our Real Estate and PPP Consulting Teams are always here to help—feel free to reach out to us at any time regarding this topic or others that you want to discuss or consult with us on.

The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We, therefore, make no warranties, expressed or implied, on the services provided hereunder.