Seeking Their Share of Coronavirus Relief Funds, These Texas Firms Wasted No Time
At least three midsize Texas firms have successfully applied for a Payroll Protection Program loan after they quickly sought the relief in an effort avoid laying off employees.
April 13, 2020 at 09:41 AM
5 minute read
Houston trial firm Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing got word last week that its application for a loan to cover employee paychecks was accepted, the payoff of a several-day process that included dozens of calls to the firm's banker.
Knowing that funds for the Paycheck Protection Program—part of the $2 trillion COVID-19 pandemic relief bill—are limited, the firm rushed to file its application, said managing partner John Zavitsanos. Under the program, banks will loan up to $10 million to businesses with fewer than 500 employees, but the bill earmarked only $349 billion for that purpose.
So to avoid missing out, Zavitsanos said, his firm worked quickly and stayed on top of the process.
"We were just manically obsessive with our banker to the point that I think he took his phone off the hook, because we were calling him so much. The whole trick is to get in line, get in the queue, so you have a[n application] number," he said.
Ahmad Zavitsanos is one of many midsize and small Texas firms that applied for the government-backed loans, which are forgivable in full or in part if employers use the money to keep employees on the payroll for eight weeks.
"The government is encouraging you to keep a team in place," said Stewart Feldman, a tax lawyer at Feldman Law Firm in Houston who has advised firms on their PPP applications.
Munsch Hardt Kopf & Harr and Chamberlain, Hrdlicka, White, Williams & Aughtry are among other Texas firms that have successfully submitted PPP applications under the program administered by the U.S. Small Business Administration.
Munsch Hardt, which has offices in Dallas, Houston and Austin, submitted its application for a PPP loan on April 4 and got approval on Wednesday, CEO Phil Appenzeller said.
He said the loan will be a "huge blessing" at the firm, which has a total of 225 lawyers and staff. The firm submitted it through its bank, Bank of Texas, as soon it could be filed. "Our CFO had everything ready to go," he said.
In addition to applying for the payroll loan, Appenzeller said, the firm's equity partners voted unanimously to reduce draws by 25% beginning on April 15. That action is intended to conserve cash, because of uncertainty in the economy, he said.
"Trying to make decisions [based] on very little facts is difficult," he said.
With the economy stalled because of stay-home orders enacted to slow the spread of the coronavirus, industry advisers are recommending that firms with fewer than 500 employees consider applying for the PPP loans.
The SBA will forgive all of the loan's principal if, eight weeks after receiving the money, the businesses have kept all of their employees on the payroll and the money borrowed is used for compensation, rent, mortgage interest or utilities. But, if businesses take the money and lay off employees anyway—or cut their pay by more than 25%—they have to pay back a portion of the principal.
Even before the loan program was approved by Congress, Zavitsanos said his firm notified employees that it had no plans to lay off anyone. But as soon as the PPP program was announced—applications opened April 3—the firm's accountant and office manager started drafting an application, he said.
"We put the application together three times. The guidance and the forms changed three times," he said.
While the firm got an application number Monday, Zavitsanos said, he has received no word about when the loan will be processed.
To ensure the loan is forgiven, Zavitsanos said the firm plans to use the loan exclusively for payroll. With just under 100 employees, Ahmad, Zavitsanos is eligible to request funding covering up to $100,000 of any employee's pay, he said.
"It is by no means going to cover our monthly nut here, but it will help," he said.
He said the firm's banker at Origin Bank, Jody Proler, bent over backward to assist with the application. Proler was not available for comment, but a spokesman for Louisiana-based Origin Bank said it has assisted a number of law firms with PPP applications.
Larry Campagna, managing shareholder of Chamberlain Hrdlicka, confirmed that the SBA has accepted the firm's PPP application, but he could not be reached for further comment.
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