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Paycheck Protection Program: An Overview for Doctors & Small Business Owners

During the COVID-19 crisis, most practices are doing whatever they can to keep their office staff on the payroll, not only to help team members weather the storm, but to ensure they'll be available to return to your clinic or office when it's time.

The Paycheck Protection Program, offered through the U.S. Small Business Administration, earmarks $349 billion in loans to help employees stay on the payroll. 

Small businesses and sole proprietorships could apply through existing SBA lenders, beginning Friday, April 3, while independent contractors and self-employed individuals could begin applying Friday, April 10. 

The application deadline is June 30, although since there is a funding cap, practices are encouraged to apply as soon as possible. The application is available here.

The loans can cover up to two months of average monthly payroll costs from the last year, plus an additional 25 percent of that amount for mortgage interest, rents, and utilities, with a cap of $10 million.

The loans will be forgiven, providing that the funds are used to cover payroll, and most mortgage interest, rent, and utility costs, incurred over the eight-week period after practices and clinics receive the loan proceeds. 

In addition, applicants must:

  • Maintain current employee compensation levels
  • Apply for no more than $100,000 per year for each employee
  • Have no more than 500 employees (some exceptions apply, click here to see if you qualify), and
  • Provide payroll documentation when applying

Practices can apply through any existing SBA lender, participating federally insured depository institution, or federally insured credit union. Other regulated lenders will be available once they are approved and enrolled in the program.

The SBA is waiving its requirement that businesses try to obtain loan funds from other sources. No loan collateral or personal guarantees are required.

Payroll costs include:  

  • Salary, wages, commissions
  • Employee benefits (including vacation, parental, family, medical, or sick leave - but excluding leave taken under FFCRA)
  • Allowance for separation or dismissal
  • Payments for group healthcare benefits (including insurance premiums and retirement benefits)
  • State and local taxes assessed on compensation

For a sole proprietor or independent contractor, payroll costs include wages, commissions, income, or net earnings from self-employment, capped at $100,000 per year for each employee. 

If you laid off or furloughed employees between Feb. 15 and April 26, you have until June 30 to rehire them and apply to the program. If your rehire offer has been rejected, refer to this blog post. Loan forgiveness will be reduced if your full-time employee headcount or employee wages are reduced by more than 25 percent. For non-forgiven amounts, the term is two years at a one percent interest rate, with a provision for deferring payments for six months.

You must also certify that you used the forgiveness loan amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender will make a decision on the forgiveness within 60 days. 

Program FAQs can be found here.

Paycheck Protection Program Flexibility Act (PPPFA) passed June 4, 2020.

Related: Paycheck Protection Program Seeks Additional Funding, New Paycheck Protection Program Guidance Released, Applying for Assistance through the CARES Act

Due to the rapidly changing guidelines around the available relief programs for small business owners, we recommend you consult your CPA for further guidance.

We provide services to help you handle compliance with state laws, hiring, and all your other HR needs.  If you have questions about managing your employees during the COVID-19 pandemic or any other questions, please reach out to us and SCHEDULE A CALL, or call: 877.779.4747, or email: compliance@hrforhealth.com

HR for Health is one of the nation’s leading Human Resources Management Systems (HRMS) used by small to mid-sized practices. HR for Health has provided the following complimentary articles to ensure you have a game plan when addressing complex HR matters.

Quick note: This is not to be taken as legal or HR advice. Since employment laws change over time and can vary by location and industry, consult a lawyer or HR expert for specific guidance. Learn about HR for Health's HR services.

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