COVID-19: Small Business Administration Assistance for Family Physicians

EIDL Cap Cut and SBA Limiting Applications

The SBA has cut the cap on Economic Injury Disaster Loans to $150,000, down from $2 million when the program was first initiated.

The SBA is also limiting applications to agricultural businesses, starting May 4. If you applied prior to April 15 — when the application portal closed — you’ll be reviewed on a first-come, first-served basis.

It is unknown whether additional funding will be allocated.

Get Started with the Paycheck Protection Program

Applications for the Paycheck Protection Program are open.

Questions? Read an FAQ(1 page PDF) on the Paycheck Protection Program and find an eligible lender(www.sba.gov).

EIDL Cap Cut and SBA Limiting Applications

The SBA has cut the cap on Economic Injury Disaster Loans to $150,000, down from $2 million when the program was first initiated.

The SBA is also limiting applications to agricultural businesses, starting May 4. If you applied prior to April 15 — when the application portal closed — you’ll be reviewed on a first-come, first-served basis.

It is unknown whether additional funding will be allocated.

Updated May 19, 2020

PPP Loan Forgiveness Application Form

The Small Business Administration (SBA) has posted a Paycheck Protection Program (PPP) Loan Forgiveness Application(www.sba.gov) form.

Keep in mind, however, that Congress and the administration are considering changes to the PPP, which would lead to the application form changing. Some changes being considered that are not yet law include extending the eight-week coverage period, removing the requirement that business owners use at least 75% of the funds for payroll, and liability protections for business owners. Please work with your lender to determine when and how to complete the application.

The SBA is still accepting new applications(www.sba.gov) for the PPP. Work with your lender to apply.

Receive a PPP Loan Under $2 Million? Safe Harbor applies to you!

The SBA just provided much-needed guidance clarifying the definition of “good-faith certification” concerning Paycheck Protection Program loans. SBA FAQ No. 46(home.treasury.gov) confirms: “Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.” The SBA established this safe harbor because such borrowers are unlikely to have adequate sources of liquidity. The SBA will focus on larger loans for audit purposes.

In addition, the SBA is extending the repayment date for this safe harbor to May 18, 2020, to give borrowers an opportunity to review and consider FAQ #46. Borrowers do not need to apply for this extension. Refer to SBA FAQ No. 47(home.treasury.gov).

SBA Programs Receive Round Two Funding

On April 24, legislation was signed providing additional funding to the Paycheck Protection Program(www.sba.gov) and the Economic Injury Disaster Loan COVID-19 assistance program(www.sba.gov), including the Emergency Advance. The funding is expected to be available on Monday, April 27.

Haven't applied?

If you haven’t applied, you need to act quickly. It’s best to apply with a lender you have a relationship with to help expedite the process.

Find an SBA eligible lender »(www.sba.gov)

If you’ve applied, here’s what's happening

If you have already submitted an application, please check with your lender to determine the status of your application, including the completion. Your application should still be in the queue, but verify with your lender.


Economic Injury Disaster Loan and Loan Advance

Family physicians can now apply for an Economic Injury Disaster Loan and a Loan Advance to help overcome loss of income due to COVID-19.

Keep in mind:

Small business owners in all U.S. states, Washington, D.C., and territories are eligible to apply for low-interest loans to offset the impacts of COVID-19. Information on how the SBA will grant loans of up to $2 million per business is available here(www.sba.gov).

The loans can be used to pay fixed debts, payroll, accounts payable, and other bills that cannot otherwise be paid as a result of the disaster. The interest rates for these loans are 3.75% for small businesses and 2.75% for private nonprofits.

The SBA offers long-term loans, with terms for repayment up to 30 years and terms determined on a case-by-case basis, depending on each borrower’s ability to repay.

Applicants may request an expedited disbursement (called an Economic Injury Disaster Advance Loan) of up to $10,000, to be paid within three days of the request. The $10,000 advance must be used for authorized costs but does not have to be repaid, even if the EIDL is not approved. Apply for the advance here(covid19relief.sba.gov).

The deadline to apply for an Economic Injury Disaster loan is December 16, 2020. The SBA has set the “incident period” to have begun on January 31, 2020, and to continue indefinitely.

Applicants must submit the completed loan application and a signed and dated IRS Form 4506-T(disasterloan.sba.gov) granting the IRS permission to provide the SBA with tax information. Applicants may also apply in person at a Disaster Recovery Center. More information regarding the three-step application process is here(disasterloan.sba.gov).

The SBA usually makes a decision on an application within two to three weeks. If the decision is affirmative, the SBA will send loan-closing documents to the applicant for a signature. Upon its receipt of the signed closing documents, the SBA will normally provide the applicant with an initial disbursement of $25,000 within five days. 

Learn more about SBA's COVID-19-related resources or apply for an Economic Injury Disaster loan »(www.sba.gov)


Get Started with the Paycheck Protection Program

Applications for the Paycheck Protection Program are open.

Questions? Read an FAQ(1 page PDF) on the Paycheck Protection Program and find an eligible lender(www.sba.gov).

Paycheck Protection Program

The Paycheck Protection Program(www.sba.gov) (PPP) is a new, temporary loan program authorized under the CARES Act, administered through the SBA, and designed to provide a direct incentive for small businesses to keep their workers on payroll.

The PPP provides each small business a loan up to $10 million for payroll and certain other expenses. The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, mortgage interest, rent, and utility costs over the eight-week period after the loan is made, with employee and compensation levels maintained.  

Small businesses and sole proprietorships can apply beginning April 3, 2020. Independent contractors and self-employed individuals can apply beginning April 10, 2020.

Who is eligible for the Paycheck Protection Program?

  • Businesses with 500 or fewer employees whose principal site is in the U.S.
  • Nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors are eligible.

Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.

Other eligibility requirements:

  • Must have been in operation on February 15, 2020.
  • Must certify in good faith that they meet specified eligibility and use requirements of the program, that the current economic conditions make the loan necessary, and to the accuracy of documentation submitted (subject to fines and imprisonment).
  • Eligibility determinations are not based on ability to repay, and businesses won't need to provide a personal guarantee or collateral. 
  • If you receive an EIDL from January 31, 2020, through April 3, 2020, you can apply for a PPP loan. If you didn’t use the EIDL for payroll costs, it will not affect your PPP loan. If you did use your EIDL for payroll costs, your PPP loan must be used to refinance your EIDL. If you received a $10,000 advance on your EIDL, it will be deducted from the loan forgiveness amount of the PPP loan. 
  • Priority is given to underserved, rural, and veterans’ markets, and businesses owned by socially and economically disadvantaged individuals, women, and businesses less than two years old. 

What can the money be used for?

The loans can be used for payroll costs, mortgage interest payments, rent payment on leases, utilities, interest on other existing debt (incurred prior to February 15, 2020), and refinancing an SBA EIDL.

Payroll costs include:

  • compensation to employees (whose principal place of residence is in the United States) in the form of salary, wages, commissions, or similar compensation;
  • cash tips or equivalent;
  • payment for vacation, parental, family, medical, or sick leave;
  • allowance for separation/dismissal;
  • payment for employee benefits including insurance premiums and retirement;
  • payment of state and local taxes assessed on compensation.

For independent contractors, sole proprietors, or self-employed persons, payroll costs include wage, commissions, income, or net earnings.

PPP Loan Parameters

  • The total amount per loan is capped at $10 million. The interest rate is 1%. The loan will be due in two years. Payments are deferred for six months, but interest will accrue from the date of disbursement. The last day to apply for a PPP is June 30, 2020.

Catalyst Health Network SBA PPP Calculator

Catalyst Health Network has developed a calculator to help practices determine the amount of loan they would qualify for under the Paycheck Protection Program.

The maximum amount of each loan is 2.5 times average monthly payroll costs during the year prior to the loan date. (For businesses not in operation in 2019, the average total monthly payroll costs are determined based on January and February 2020.)
 
Payroll costs will be capped at $100,000 annualized for each employee and/or for sole proprietors, independent contractors, and self-employed individuals. Compensation in excess of $100,000 per employee/sole proprietor/independent contractor is excluded.  

  • Independent contractors do not count as employees for the PPP loan calculation and should apply on their own for a PPP loan.
  • There are no fees payable by borrowers. All pre-payment penalties are waived.
  • Only one PPP loan is allowed per borrower (so consider applying for the maximum amount).
  • A loan under the Paycheck Protection Program makes the borrower ineligible for the Employee Retention Tax Credit made available under the CARES Act.

PPP Loan Forgiveness

The PPP loan can be forgiven up to the full principal and accrued interest if the borrower uses all of the loan proceeds for forgivable purposes and employee and compensation levels are maintained.

Loans can be used for payroll costs, mortgage interest, rent payments on leases, and utility payments over the eight-week period following the date of the loan. However, at least 75% of the forgiven amount must be used to cover payroll costs; not more than 25 percent of the loan forgiveness amount may be attributable to nonpayroll costs.

Amount forgiven:

The amount forgiven will be reduced if the business has had employee layoffs or reductions to employee salaries and wages.

  • Number of staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount (FTEs).
  • Level of payroll: Your loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee who makes less than $100,000 annualized in 2019.
  • Rehiring: You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020.

How to request PPP loan forgiveness

Submit a request to the lender that is servicing the loan.
 
The request will include documents that verify the number of full-time-equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations.
 
You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.
 
The lender must make a decision on the forgiveness within 60 days.

Additional resources include: