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Last evening, Congress passed the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”), which provides greater flexibility in how borrowers may use Paycheck Protection Program (“PPP”) loan funds and receive loan forgiveness. It is anticipated that the Act will be signed into law by the President in short order. Under the Act, businesses that have not already received a PPP loan will have until December 31, 2020 to apply, subject to continuing availability of funds. PPP monies are still available.
The Flexibility Act also extends the covered period used to determine loan forgiveness. Increased from 8 weeks, borrowers may now receive loan forgiveness for amounts spent on forgivable expenses during the 24 week period following loan origination, or December 31, 2020, whichever comes first.
Executive Order 2020-34 allows food and beverage businesses to reopen for dine-in services. This modifies and supplements Executive Order 2020-09, which previously closed restaurants and bars with the exception of takeout and delivery orders. Now restaurants, bars, taprooms, and tasting rooms can allow dine-in services as of Monday, May 11, 2020, and continue to offer takeout and delivery.
The Executive Order allows food and beverage businesses to resume dine-in services “provided they establish and implement protocols and best practices for businesses to address COVID-19, including enacting physical distancing policies, limiting the number of diners and following the protocols as directed by the Centers for Disease Control and Prevention, the United States Department of Labor Division of Occupational Safety and Health Administration and the Arizona Department of Health Services.” Phrase-by-phrase, this means:
- Dine-in services is a broad term that covers restaurants, bars, taprooms, and tasting rooms that serve food.
The Federal Reserve recently announced that it is establishing the Main Street Lending Program (“MSLP”) to provide significant financing for businesses impacted by the COVID-19 pandemic. The MSLP will provide 4-year loans to companies employing up to 10,000 workers (or with revenues of less than $2.5 billion on an annualized basis). The minimum loan size will be one million dollars. Principal and interest payments will be deferred for one year. MSLP loans are not currently available, but they are expected to come online soon, as the Federal Reserve is currently working to create the necessary infrastructure and is considering feedback provided by the public.
Congressional leaders are reportedly close to an agreement on new legislation providing additional funding for the Paycheck Protection Program (“PPP”). Eligible businesses who have not yet obtained a Payroll Protection Program loan should be prepared for the program to re-open soon. Initial PPP funding was rapidly depleted, and many eligible businesses were unable to participate in the unprecedented program.
Please compile your documents together so you can provide to your lender, as needed, to support your company’s loan request, including but not limited to payroll records. For those companies that did receive the PPP funding, make sure your company is implementing best practices to utilize and document the money in compliance with the applicable rules.
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