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Update: President Trump Signs Paycheck Protection Program Flexibility Act of 2020

Client Alert

Update: Today President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 ("FA"). The House passed the law on May 27 and the Senate approved on June 3. The legislation provides more flexibility to small businesses who received loans under the Paycheck Protection Program (“PPP”).

Maturity of PPP Loans

To start, the FA establishes that all PPP loans granted after the enactment of the FA will carry a 5-year minimum maturity term. For already existing loans, the FA allows for lenders and borrowers to mutually agree to modify the 2-year maturity term of the existing loan and implement the new 5-year minimum.

Extended Covered Period

Further, the FA extends the deadline to apply for a PPP loan to December 31, 2020. The covered period for which PPP loan recipients may spend the loan is also extended. Originally, small businesses had 8 weeks to spend the PPP loan money. Under the FA, small businesses may spend the PPP loan money during a 24-week period or until December 31, 2020, whichever occurs first. A business that has received a loan prior to the enactment of the FA may elect to spend their loan within the 8-week spending period that coincides with origination of their loan or extend it through the new 24-week covered period.

Payroll vs Nonpayroll Uses

Prior to the FA, recipients of a PPP loan were required to use 75% or more of the loan on payroll expenses in order to be eligible for loan forgiveness. The FA reduces that amount and requires recipients to spend at least 60% of the loan amount on payroll expenses in order to be eligible for loan forgiveness. This allows a recipient of a PPP loan to use up to 40% of the loan amount on non-payroll expenses like mortgage, rent, and utility payments.

Full-Time Equivalent Safe Harbor

The PPP requires loan recipients to restore its full-time employee count or employee wages to its February 15, 2020 level by June 30, 2020 in order to receive the full amount of loan forgiveness. Because many businesses are still facing difficulties in restoring operations to their February 15, 2020 levels, the FA extended the date to restore the loan recipient’s full-time employee count or employee wages to December 31, 2020.

Further, the FA provides a new exemption from a proportional reduction of loan forgiveness due to a reduction in full-time employees. This exemption is conditioned on the PPP loan recipient documenting, in good faith, one of the following two findings. First, a loan recipient can document an inability to rehire individuals who were employees on February 15, 2020 and document an inability to hire similarly qualified employees for unfilled positions by December 31, 2020. Second, a loan recipient can document:

“an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.”

Extended Deferral Period

Under the initial CARES Act, a deferral period of not less than six months and no more than one year was allowed for loan payments of principal and interest. Under the FA, the deferral of payments of principle and interest extends until the lender receives the total forgiveness amount of the loan, which is determined by the CARES Act. Additionally, if a PPP loan recipient fails to apply for forgiveness of the loan, then the recipient must begin payments of interest and principle within 10 months of the end of the newly established 24-week covered period.

It is anticipated that President Trump will sign the FA into law but, until then, the CARES Act and the PPP remain in effect leaving the above-mentioned changes unimplemented.

For questions regarding the Paycheck Protection Program Flexibility Act of 2020, please contact your primary BMD attorney.


Valley National Bank/Trulieve Loan: A Big Step Out of the Shadows

In a late December press release, Trulieve announced that it had secured a $71.5 million commercial bank loan. In addition to the amount of the loan, which may be the largest commercial bank loan to date to a cannabis company, the release prominently identified Valley Bank and featured both a quote from Valley’s Senior Vice President, John Myers, and a description of the Bank’s service platform and commitment to the cannabis industry.

The End of Non-Competes? The Impact It Will Have on the Healthcare Industry

On January 5, 2023, the Federal Trade Commission (“FTC”) announced a proposed rule that, if enacted, will ban employers from entering into non-compete clauses with workers (the “Rule”), and the Rule would void existing non-compete agreements. In their Notice, the FTC stated that if the Rule were to go into effect, they estimate the overall earnings of employees in the United States could increase by $250 billion to $296 billion per year. The Rule would also require employers to rescind non-competes that they had already entered into with their workers. For purposes of the Rule, the FTC has defined “worker” to also include any employees, interns, volunteers, and contractors.”

2022 Healthcare Recap and 2023 Healthcare Check-Up

As the country begins to return to a new “normal” following the COVID-19 pandemic, there are many healthcare rules changing on both the federal and state levels as a result. Thus, it is important for healthcare providers and their employers to be aware of these changing rules, and any implications they may have on their practice. Look back on healthcare in 2022 and find a checklist for 2023.

Direct Support Professional Retention Payments

On December 15, the Ohio Senate and House passed House Bill 45, which authorizes the Department of Developmental Disabilities (DODD), in conjunction with the county boards of developmental disabilities, to launch their initiative to issue retention payments to Direct Support Professionals (DSPs). These retention payments will be distributed quarterly to participating home and community-based waiver providers to address the workforce crisis in the direct provider sector. Governor DeWine needs to sign the Bill to begin the payments, but he is expected to do so by the end of 2022.

Real Estate Investors Position for 2023 Opportunities

Real estate investors weathered another year in a post-pandemic world, with the year closing with yet another interest rate increase coupled with both uncertainty and heightened interest carrying into 2023. Just last Wednesday, the Federal Reserve raised its benchmark interest rate 0.50 percentage points, shifting the target range to 4.25% to 4.50%. The new level is the highest the fed funds rate has been since December 2007 and marks the seventh rate hike this year. So what does this mean to investors, brokers, lenders, and others in the real estate world? Read a few perspectives below from stakeholders familiar with our BMD clients and the markets in which they do business.