April 02, 2020
Area(s) of Interest: Practice Management
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides $360 billion in funding for new Small Business Administration (SBA) loan and grant programs. One of those programs is the Paycheck Protection Program (PPP), which will provide small businesses with less than 500 employees with forgivable, zero-fee loans of up to $10 million or 2.5 times their average monthly payroll costs. Part of these loans may be forgiven and not counted as income if it’s spent during the first eight weeks on operating expenses, such as payroll, group health care benefits, lease payments, mortgage interest, and utilities.
These PPP loans are available from participating private financial institutions. Physicians can apply through participating SBA 7(a) lenders or through any participating federally-insured depository institution, federally insured credit union and Farm Credit System institution. You should consult with your local lender as to whether it is participating in the program. Lenders may begin processing loan applications as soon as April 3, 2020.
Principal and interest will be deferred for at least six months and all borrower fees are waived. No collateral or personal guarantees are required. This loan has a maturity of 2 years and an interest rate of .5%.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
Employers can obtain forgiveness for salary amounts up to $100,000 per employee. For purposes of calculating “average monthly payroll,” most applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee.
The California Medical Association (CMA) recommends that interested physicians begin preparing your applications now. You can download the application to see the information that will be requested from you.
Physicians can also apply NOW for a COVID-19 related Economic Injury Disaster Loan.
Other good sources of information for small businesses struggling during this public health emergency include:
For more information: