The Paycheck Protection Program (PPP) is a new Small Business Administration (SBA) loan program established by Congress (through the Coronavirus Aid, Relief, and Economic Security (CARES) Act) to protect small businesses, including physician practices, and provide an incentive for these businesses to keep their employees and workers on the payroll. As part of this law, PPP loans can be fully forgiven if certain conditions and requirements are met.

As of May 20, 2020, the SBA approved nearly 4.4 million PPP loans, totaling more than $512 billion of the available $659 billion. If you have not yet applied for a PPP loan, there is still time to do so. A list of participating lenders by state is available here.

Below, we explore several key points about PPP loan forgiveness and what small businesses who received these loans need to know.

How does loan forgiveness work?

In general, PPP loans can be forgiven based on certain costs a borrower incurred during the eight-week period following receipt of the PPP loan:

  • Payroll costs
  • Mortgage interest payments (not mortgage principal payments)
  • Rent payments
  • Utility payments

Payroll costs are defined as the sum of employee compensation, which includes:

  • Salary, wage, commission or similar compensation (including payment of cash tips)
  • Vacation, parental, family, medical or sick leave
  • Dismissal or separation allowance
  • Group health care benefits, including insurance premiums
  • Retirement benefits
  • State or local tax assessed on employee compensation

For sole proprietors or independent contractors, payroll costs are defined as wage, commission, income, net earnings from self-employment or similar compensation that is not more than $100,000 in one year.

How do I apply for loan forgiveness?

The form with instructions to apply for PPP loan forgiveness is available here. SBA will also be releasing additional guidance to assist borrowers with applying for loan forgiveness.

What happens if my loan is not forgiven?

If all or a portion of your PPP loan is not forgiven, the balance will be subject to the terms of the loan—a maturity of two years and interest rate of one percent. Loan payments will be deferred for six months and no collateral or personal guarantees are required.

Where can I learn more?

A section-by-section summary of the PPP law is available here.

Additionally, the Department of Treasury and the SBA each have devoted websites for information on the PPP. We recommend staying up to date on new developments at their respective websites:

Staff at ACOFP and our Washington, DC advocacy partner—Alston & Bird LLP—are available to assist with any questions you may have on the PPP loans or other legislative and regulatory developments impacting osteopathic family physicians.

To learn more about the legislative landscape during the COVID-19 pandemic, as well as what the recent changes mean for your practice, please join us for a members-only webinar on Wednesday, May 27, at 7:00 pm CT. There will be an opportunity to hear from Alston & Bird, voice your opinion on what is important to you during these times and provide important feedback.

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