Some businesses face challenges meeting requirements for PPP loan forgiveness

HOUSTON, Texas (KTRK) -- As the state of Texas begins to reopen, some businesses that received the Paycheck Protection Program loan are now faced with new challenges.

According to the Small Business Administration, the loan can be used for interest on mortgages, rent, utilities and payroll, but at least 75 percent of it has to be spent on payroll for the loans to be forgiven.

On top of that, it has to be repaid in two years, and some businesses say that's just not realistic.

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"We're suggesting that they can go 50/50 rather than 75/25," said Tracy Vaught, president of the H-town Restaurant Group, which includes Hugo's, Xochi, Caracol, and Backstreet Cafe. "Each business is different, and sometimes, the rent is a bigger portion then others."

Vaught said they are delaying reopening its restaurants and relying on curbside sales as they plan how to operate safely with social distancing guidelines in place.

She said the rule requiring businesses to re-hire the same amount of employees as they had before the COVID-19 shutdown is difficult, especially now that restaurants can only serve a limited number of people who dine-in.

"Do you just hire up a bunch of people and have them stay home just so you can get the forgiveness or do you grow your business as you normally would and then forfeit the forgiveness?" Vaught asked.

These are challenges she's still trying to work out, but she's hopeful the rule can be modified to make it easier to receive loan forgiveness.

"The government rushed into this, and I'm glad they did rush into it," she said. "We needed something immediately, but now we have a little bit of time to go back and make some administrative changes that could really help. So, I'm hoping that will happen."

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