CARES Act Explained for Landlords & Other Business Owners [Part 1/4]

CARES Act: Coronavirus Emergency Handout Plan Sans PPP/EIDL

John Hyre, a veteran attorney, accountant, and real estate investor walks us through the potential advantages and pitfalls of the CARES Act.

While the second wave of money from the government may hopefully be available for the PPP and EIDL as early as next week, there are still many questions, i.e. do businesses need to apply again? Some questions we have answers to while some are still left unanswered as the government continues to figure things out on the fly.

Slide 2
This is not legal advice — this is education.

Slide 3: Payroll Protection Program (PPP)
(1) Small community banks were significantly faster and more flexible
(2) Banking relationships matter a lot
(3) A lot of people who did not “need” loan/grant signed that they did, under penalties of perjury
(4) Schedule C/1099 count but only to extent of 2019 net profit
(5) Contractors generally do not count as employees

Slide 4: Economic Injury Disaster Loan
(1) The $10K is not “free money”
(2) Advance on loan if bank chooses to grant it
(3) Only “free” if bank gives advance ND TURNS YOU DOWN FOR A LOAN
(4) “Need” & “Perjury” apply here as well as to PPP
(5) Landlords & AirBNBers have been getting it

Slide 5: Regular Unemployment
(1) Regular local benefits
(2) PUC: Add $600/week for 4 months from the Feds
(3) It applies to contractors, not just employees
(4) Still working from home? You do not qualify.
(5) Hours were cut? Depends on the state.
(6) Were working part-time? Looks like it qualifies in spite of regular state law.
(7) Benefits are taxable income & could qualify for some programs (i.e. utility bill assistance, childcare, etc.)
(8) States have to sign agreement with Feds, several have already (CA, NY, MI)
(9) State systems are presently overloaded — be persistent; try late at night when system isn’t overloaded
(10) State coverage rate is 12% to 50% of unemployed

Slide 6: Loans from Qualified Retirement Plans
(1) Only to “Qualified Individual”
(2) Within 180 days of Trump’s signature (3/27/20, so by 9/23/20)
(3) Not IRAs
(4) $100K (instead of $50K) or 100% (instead of 50%) of FMV of plan, whichever is less
(5) Likely need to amend plan doc; have until 2022 to do so
(6) 401k loan payments due before 12/31/20 (on existing new loans) may delay those payments for up to a year
(7) Still 5-year limit
(8) In addition to withdrawals

Continue watching:
Part 2:    • CARES Act Explained for Landlords & O...  
Part 3:    • CARES Act Explained for Landlords & O...  
Part 4:    • CARES Act Explained for Landlords & O...