Paycheck Protection Program loan forgiveness application, guidance now available

Latest federal legislation could provide more targeted relief for small businesses

The Small Business Administration on May 15 released an application that borrowers must use to determine how much of their Paycheck Protection Program loan will be forgivable when applied to payroll and other qualifying expenses during the COVID-19 crisis. Borrowers must complete and submit the application to their lender. 

As provided in the federal CARES Act, 100% of the PPP loan amount is forgivable for employers affected by COVID-19 provided the employer (1) spends at least 75% of the PPP loan on eligible payroll costs and (2) maintains or rehires the number of workers who were employed prior to the current public health emergency. The employer must also maintain its employees’ wages.

Notably, as a recent article in Forbes points out, the SBA’s new application “confirms (with one small exception) that only those expenses paid within the 8-week period after receiving the loan are eligible for forgiveness,” and many borrowers are already at least halfway through those eight weeks. 

Generally, the eight-week period begins on the date the borrower receives the funds, but borrowers do have some flexibility in selecting the start date specific to payroll costs. And expenses that are paid after the eight-week period may be eligible for forgiveness in specific situations.

The PPP loan forgiveness application includes instructions for completing, but the Forbes article also walks borrowers through each line item and explains how borrowers can choose the “alternative payroll covered period.” CDA encourages its members to seek financial guidance from their accountant or financial advisor to ensure they receive appropriate advice based on their individual situation. 

SBA publishes frequently asked questions about PPP loan program

The SBA last week also released frequently asked questions about the PPP loan program.

The FAQ document contains nearly four dozen questions and answers for borrowers and lenders about eligibility, covered payroll costs, exclusions, contracting and other concerns. SBA stated it will work with the Department of the Treasury to update the document on a regular basis and that “borrowers and lenders may rely on the guidance” provided in the document. 

CDA hopeful next federal bill will provide relief for very small businesses

The House on Friday passed legislation that contains more targeted financial relief for the smallest businesses. Although unlikely to pass the Senate in its current form, the HEROES Act contains some of the provisions that CDA and its member dentists have been advocating for.

More than 2,300 members responded to CDA’s call to action in mid-April to contact their senators and members of Congress to request that the SBA set aside a portion of funding for small businesses that employ fewer than 10 employees ― a group that includes 80% of California dental offices. That provision is included in the HEROES Act along with additional federal relief for dentists and other vulnerable, essential health care providers.

Also, as ADA wrote Monday,  organized dentistry is urging Congress to allow the PPP loan funds “to be used for purchasing additional personal protective equipment as well as for tax credits to be provided for personal protective equipment.”

Any new federal legislation that is ultimately passed and signed by the president could also streamline the SBA loan application process, as many small businesses are still struggling to understand the complicated terms of the program.

CDA will keep members informed about any legislation impacting the SBA’s PPP loan program and other financial options for dentists in the online newsroom and weekly Update newsletter.

Resources cited in this article and additional assistance:
SBA’s PPP loan forgiveness application and instructions
SBA’s PPP loan frequently asked questions
CDA’s SBA Loan Options Flowchart
CDA’s breakdown of options for small businesses 
CDA article outlines SBA’s Economic Injury Disaster Loan and PPP loan

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