Congress struck an agreement on Tuesday (April 21st) to provide another $310B for the Paycheck Protection Program (PPP) and another $60B for the Economic Injury Disaster Loan (EIDL). This comes after the PPP and the EIDL ran out of money last week. You can read our post about this here. These were major components of the stimulus representing $350B of the $2T funding announced earlier this month. It’s incredible that the initial program funding ran out of money in less than 2 weeks. However, it’s not too surprising given the generous loan forgiveness available. Up to the entirety of the loan can be forgiven, based on amounts paid for payroll and overhead costs, so this is an excellent way to have your payroll costs covered in almost their entirety.
If your practice meets the eligibility criteria below, you should consider applying immediately! Multiple sources indicate that the second wave of funding may run out faster than the first wave. Some sources even indicate that the new funds may evaporate before the end of the week.
Companies eligible for the PPP loan are businesses with 500 or fewer employees, with net worth below $15M, and net income annually below $5M. The program will finance total payroll costs covering 2.5 months of payroll, excluding payroll for individuals making over $100k annually.
The forgiveness will cover payroll, interest, rent, and utility costs spent during the 8 weeks following loan origination. However, no more than 25% of the forgiveness can be for non-payroll costs. Further, the forgiveness is reduced in proportion to the number of employees reduced during the same 8 week period relative to the average number of full-time employees that the business had per month in January and February 2020, or February to June 2019 (option to select comparison period). The forgiveness is also reduced to exclude payroll costs for any pay at an annual rate over $100k.
We made a post earlier this month about the Medicare relief payments paid out beginning April 10th. Since then, HHS has made the below clarifying statement that should allow providers to feel much more comfortable about agreeing to the terms and conditions of the payment.
“If you ceased operation as a result of the COVID-19 pandemic, you are still eligible to receive funds so long as you provided diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Care does not have to be specific to treating COVID-19. HHS broadly views every patient as a possible case of COVID-19.”
You can learn more about the PPP here, and the loan application form can be found here. Thank you to our partners at Wehrman Healthcare Management Solutions LLC for contributing insights to this post.
– Ben Scharfe, Amazing Charts
Ben Scharfe is a CPA, CA who has been with Harris Healthcare for over five years and is currently a member of the Amazing Charts leadership team.
For more information and resources for handling the COVID-19 crisis, visit our dedicated COVID-19 page here.