With each act of Congress that provides help during this challenging time comes a wave of questions. How does a specific act apply to your practice? What are the next steps to take with SBA loans? We understand your confusion and we share your frustration in trying to get answers. Therefore, we want to address the three most common areas that are generating questions:
- Families First Coronavirus Response Act (paid leave)
- Paycheck Protection Program (PPP) loan or SBA 7(a) loan
Families First Coronavirus Response Act
Are your employees subject to the new paid leave act? If your employees are on unemployment due to a furlough, those employees are not subject to the new act. If you still have employees working full-time hours, you may be exempt due a hardship exemption for businesses with fewer than 50 employees. We will know more about the hardship exemption soon. The ADA is also lobbying for an exemption for dental practices. More to come on this.
At this point, it is best to guide employees to take unemployment. Also, you are required to put up the new Families First Coronavirus Response Act poster (the poster needs to be up starting today).
Paycheck Protection Program (PPP)
Here is what we know about the new PPP loan (or SBA 7(a) loan):
- If you have applied online for the EIDL loan (SBA 7(b) loan), this does not hurt your chances for the PPP loan. We are still waiting for guidance on how the two loans can be used. Our original advise still stands to apply for EIDL but do not take the loan proceeds until we receive further guidance
- Available to small businesses with fewer than 500 employees.
- The loan amount is 2.5 times the average monthly payroll cost (includes wages, health insurance, PTO, retirement plan contributions, state and local payroll taxes but not federal payroll taxes, up to $100,000 per employee).
- Part of the loan may be forgiven. The amount forgiven is equal to what is spent on payroll costs, interest, rent, and utility payments for the eight-week period following loan funding. Loan forgiveness is contingent upon having at least 75% of employees back on payroll by June 30, 2020 that were on payroll prior to February 15, 2020.
- Any loan amount not forgiven can be repaid over 10 years. There are no payments for the first 6 – 12 months.
We know you have additional questions about the PPP loan (just like we do). One of the biggest questions is what to do next? We recommend that you contact your banker to learn about the specific requirements for the loan. Your bank will give you a list of items to get together for the loan. Based on what we know at this point, we believe you will need the following:
- Completed personal financial statement. If you filled this out for the EIDL application and still have a copy or have a recent one you completed, you can use that for the application.
- Copies of the last two business and personal tax returns. Some banks may need tax returns for the last three years.
- If the 2019 business tax return has not been completed, a draft copy of the balance sheet and profit and loss will be needed.
We will be in conversations throughout the day with experts concerning the new loan, and as soon as we learn more, we will share that information with you. Also, from what we were told by our banking sources, SBA regulations will be released later today that will also help clarify how to proceed. We will be sharing more about the new PPP loan very soon.
As mentioned in the first section, we recommend that you direct your team to unemployment. Owning doctors have asked if they also qualify for unemployment. Most of our owning doctors qualify to file for unemployment (if you are unsure, please contact us).
A common question from owning doctors is how to account for time in the office seeing emergencies. If you are receiving compensation for this time, you must report the compensation to the unemployment office. You must always be 100% truthful in the information supplied to the unemployment office.
If you did not receive compensation while seeing patients, then based on the advice we have received from employment attorneys (who were making their best educated guess given the current situation), you would report zero hours and zero compensation for the week to the unemployment office. If you have questions about your specific situation, we strongly encourage you to contact the unemployment department—many employment attorneys will direct you there since the current situation is so unique.
We will continue to keep you updated about new loans and legislation as we learn more.