COVID-19: Paycheck Protection Program Flexibility Act

Yesterday the U.S. Senate passed the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) and Governor Abbott released updated guidance in continuing to open up the Texas economy.

Paycheck Protection Program Flexibility Act
(H.R. 7010)

While the Paycheck Protection Program (PPP) was a much-needed relief to small businesses, there were a number of areas of concern. The new legislation, authored by Representatives Chip Roy (R-TX) and Dean Phillips (D-MN), brings significant flexibility and improvement to the PPP. While we await guidance on specific regulations and guidance from the U.S. Department of Treasury and the SBA, within the legislation are several new provisions designed to expand flexibility for PPP borrowers:

  • Deadline for Covered Period: The “covered period” for loan forgiveness is extended so that PPP loan funds can be spent to the earlier of 24 weeks after the loan is disbursed, or December 31, 2020.
  • Loan Maturity: While the initial legislation was a two-year term at a 1% fixed rate, new PPP loans disbursed after the enactment of H.R. 7010 will have five-year loan terms. Further, for existing PPP loans, the Act specifies that nothing will “prohibit lenders and borrowers from mutually agreeing to modify the maturity terms of a covered loan.”
  • Forgivable Uses: Modifies the 75/25 split whereby 75% of the loan had to be used on payroll expenses and 25% could be on rent, mortgage interest, or utilities. The Act raises the cap on how much may be spent on non-payroll costs to 40% and lowers the payroll portion from 75% to 60%.
  • Rehiring Workers: There are important provisions related to the rehiring of FTEs for loan forgiveness.
    • Extends the existing safe harbor to December 31, 2020. Borrowers who furloughed or laid-off employees will not be penalized or subject to loan forgiveness reduction if they restore their FTE levels by the new deadline.
    • If an employer is unable to rehire to reach their previous FTE levels, the forgivable amount will not be reduced, provided that they can document they attempted to rehire individuals who had been employed February 15, 2020 and have not been able to hire “similarly qualified” individuals before December 31, 2020.
    • Forgiveness will not be reduced due to a reduced FTE count if the borrower can document an inability to return to the “same level of business activity” as of February 15, 2020 or prior, due to new guidelines and standards for sanitation, social distancing, or other safety requirements.
  • Payroll Tax Deferral: The ban on utilizing payroll tax deferral and the PPP is lifted. Borrowers may use the PPP and receive full or partial forgiveness, and also defer payroll taxes.

Phase III of Reopening Texas

Governor Abbott announced Phase III of reopening Texas. This means:

  • Effective immediately, most business establishments may increase their occupancy from 25% to 50% total listed occupancy. Except in manufacturing services and office workers, staff is not included in determining operating levels.
  • Group size, including for restaurant tables, is expanded to ten, and group should maintain six feet of social distancing from those not in their group.
  • Excluded from the occupancy limits:
    • Religious services conducted in houses of worship
    • Local government operations
    • Child-care services
    • Youth camps (daytime and overnight)
    • Recreational sports programs
  • The 50% occupancy does not apply to several categories of establishments, provided they operate with at least six feet of social distancing between work stations:
    • Cosmetology salons, hair salons, barbershops, nail shops, or other venues where licensed cosmetologists or barbers practice their trade
    • Massage establishments or other facilities where licenses or authorized individuals practice their massage trade
    • Other personal-care or beauty services such as tanning salons, tattoo studios, piercing studios, hair removal services and hair loss treatment and growth services
  • For indoor bars and other similar “non-restaurant indoor establishments” that hold a TABC permit, only seated customers may be served.
  • On June 12, 2020, for dine-in services at restaurants, occupancy will be increased to 75% of the total listed occupancy, as long as six feet of social distancing is maintained.
  • For sporting activities, professional stadiums may increase their occupancy to 50%, and collegiate athletics may open their events to the public at 50% capacity.

Read the full executive order, including additional provisions for outdoor gatherings and amusement parks >

Reopen Waco

We are pleased that our country and our state are moving through the process of carefully and thoughtfully reopening. With that in mind, we’ve collected resources from our local, state and federal partners to help you reopen safely.
View the Resources >

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