The newly introduced CARES Act provides Paycheck Protection for health care practices and physicians suffering from financial losses due to COVID-19. The federal government offers paycheck Protection Program (PPP) SBA loans. You may qualify for tax-free debt forgiveness if you meet the criteria regarding the use of funds. Loan forgiveness is contingent upon proper use of the loan amount. Additionally, physician practices may be eligible for exclusive relief through the Department of Health and Human Services (HHS) Public Health and Social Services Emergency Fund.
(7) Paycheck Protection Program Eligibility for Health Care Practices
Health care providers with no more than 500 employees should be eligible for PPP loans. A loan amount may total up to 250 percent of a practice's average monthly payroll costs. Loans are intended to cover an eight-week period. Approved funds:
If you are only concerned about getting approved for the PPP loan programs, you may want to consider optimizing your spending of the funds to increase the chance of complete loan forgiveness. Our medical practice accountants here at Fusion CPA generally recommend that health care providers partner with an experienced accountant to help plan appropriately. If you take this next step and create a strategy, you may be able to capitalize on this opportunity.
Approved use of funds for Paycheck Protection Program SBA loans for health care practices:
Salary, wages, commissions, and tips
Benefits and vacation time
State and local taxes assessed on compensation
You may have to provide your lender with payroll documentation. The requirement to first look at other funds before applying with a lender might be waived. As of today, a health care provider may only be able to apply for one loan during the relief period.
The basic loan details:
This is a retroactive program covering Feb. 15 of 2020, through June 30 of 2020
Two-year loan term
1-percent interest (depending upon if you meet specific criteria).
No SBA fees
Tax-free debt forgiveness (depending upon if you meet specific criteria).
As part of the CARES Act, the Small Business Administration may require borrowers to provide documentation that they've maintained the same number of full-time employees at normal pay rates. For health care providers, the loan may still be eligible for partial forgiveness if employee numbers are not maintained. Loan terms and interest may apply for any portion of a loan that is not forgiven.
Easily, one of the best aspects of this program may be that the government offers tax-free debt forgiveness. With this opportunity in place, you may be able to focus on restoring your business instead of planning for additional funds to pay off the taxed amount. Here at Fusion CPA, we understand this may be a challenging time for health care providers. So, we are here to assist. Our team of medical practice accountants is knowledgable of the PPP program and its stipulations, and our goal is to provide an understanding of the application process, eligibility requirements, and optimization for loan forgiveness. We have the resources to quickly respond to your needs. Contact us today at 404.955.7338.
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