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 is 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 apply 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.
– Ben Scharfe, PetTracks
Ben Scharfe is a CPA, CA who has been with Harris Healthcare for over five years and is currently a member of the PetTracks leadership team.