Since our last couple of bulletins on Monday and Tuesday there hasn’t been any new legislation, however, there has been more information coming out regarding updates and additional guidance regarding the CARES Act, especially on the Paycheck Protection Program loan (PPP loans). We wanted to update you on the additional information that’s come to our attention. That said, as everyone knows, things continue to change rapidly as agencies, lenders, and individuals are attempting to apply the guidelines spelled out in the CARES Act legislation. It is possible that there may be further changes announced from the Treasury, SBA, and lenders which could affect some of this information.
First, as many of you probably know and as we mentioned in our prior bulletin, it was believed that SBA lender banks would be prepared to accept and process applications for the PPP loans by today, April 3rd. As of this writing, many of those SBA lenders have come out and said they are NOT completely ready as they are finalizing coordination with SBA and finalizing their own application submission processes. At this point, it’s anticipated that the SBA lender banks who are not yet accepting applications will begin accepting them on or about Monday, April 6th as we mentioned in our earlier bulletin.
Second, there’s been a lot of discussion on when you should apply for a PPP loan. Some are advising that you should apply early, before the $349 billion Federal funds well runs dry while others advise you to wait and time the receipt of the loan closer to the day you believe your practice will open. Well, there’s no one-size-fits-all solution which is why we’ve been speaking to many of our clients on their specific situation and advising them as to the best plan fitting their individual circumstances. If you continue to have questions about the timing let us know and we’ll continue to talk with you about it. In the meantime, for those of you who may not want to apply for the PPP loan now, you should still go through the process of compiling all your information and completing the application to have it ready to go when you decide it’s the best time for you.
With respect to the information you need to gather, our bulletin this past Monday summarized what you need to gather for the application process and to achieve the MOST money you qualify for. Here are some additional details we can add to help you with this information:
- Most, if not all of the larger payroll service providers have developed their own PPP loan reports to help you compile the wage information you’ll need. You should use these reports for the wage information.
- For health benefit expenses in addition to health insurance premiums, you should include HSA contributions, HRA contributions and QSEHRA payments to employees.
- Health care benefits and retirement plan contributions should be those amounts PAID during the 12-month period as well.
- We believe 1099 Payments are intended to be for those that would otherwise be treated as employees, for example, associate doctors, temp hygienists, assistants, and front desk help. There’s still some uncertainty in the guidance on this point so we’re advising clients to include these payments at the moment for the maximum loan amount until we hear of further guidance indicating they should NOT be included.
- The latest information from the final SBA PPP Loan application indicates that most borrowers will use the calendar year 2019 as the year to determine these costs so we are recommending following this guideline. If you already have your information for the period April 1, 2019, to March 31, 2020, we believe that will be sufficient as well based on the actual content of the CARE Act Bill.
- Here’s the link to the “Final” PPP application: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
We have also learned that the portion of the loan that is NOT forgiven will need to be repaid within two years at a rate of 1%. Also, we advise that if funds are received from other loan products AFTER receiving PPP loan proceeds, that those other loan funds should be placed in a separate bank account so as to not comingle those loan funds in the same operating account where the PPP loan funds are deposited.
For those who have applied for the EIDL loan directly with the SBA, we understand that the SBA has stated they expect to be distributing the initial $10,000 “express” portion the week of April 6th, however, based on what we have seen thus far we are NOT suggesting that anyone hold their breath on this timeline.
In the meantime, let us know if you have any questions.