PPP Timeline and To-DosSubmitted by Mission Financial Planning on May 7th, 2020
Recently, our lives have been consumed with helping clients navigate PPP, EIDL, FMLA and PUA – the various government programs available for small businesses affected by Covid-19. Practices were shut down or reduced to an emergency-only schedule, staff was reduced to a few part-time essential workers, and doctors hunkered down, preserving cash, not knowing when they might practice again or when government help would arrive…
Happily, the EIDL and PPP loans are finally being funded, some states are beginning to allow dentists to practice again, and we are helping create a plan for using those PPP and EIDL funds to be sure everyone is getting back to work.
As the PPP loans are funded we are recommending the following steps for utilizing the loans:
- Open a separate bank account for the PPP and EIDL funds for ease of tracking and documentation. You can reimburse the operating account for eligible expenses, and with clear notations have a great record of the expenses to submit for forgiveness.
- Sketch out your upcoming payroll, rent (mortgage interest) and utility payments to create a roadmap of the next eight weeks.
- Figure out how much could potentially be forgiven. If you received an EIDL advance and a PPP loan, proceeds from the advance will be deducted from the loan forgiveness amount, and non-payroll expenses (rent, mortgage interest, utilities) are limited to 25% of the loan forgiveness.
- Update payroll instructions to accommodate anyone earning over 100,000 per year so their checks can be forgiven. The amount you spend on payroll will determine how much of the other expenses can be forgiven. Payroll includes not only wages but retirement plan funding, group health care benefits for employees, and paid vacation and non-FMLA sick-leave.
- For maximum forgiveness, if you furloughed employees, have a plan for getting everyone back to work at their old salary levels by June 30, 2020.
- Work with the intent of the programs in mind. Conduct that could be interpreted as an attempt to “game the system” will not be treated lightly.
- Document like crazy. We still don’t know what all the rules will be, yet many clients are in the midst of the eight-week period they have for using their PPP money. Spend with the intent of the program, stay current with SBA and US Treasury communications, and be ready to document things you didn’t even know you’d need. We have spreadsheets for tracking, let us know if you’d like a copy.
- When your eight weeks are over, apply to your bank for forgiveness of the payroll, rent or mortgage interest and utilities. They have 60 days to determine forgiveness. If you have PPP money left over, you can continue to spend it on eligible expenses or return it to the SBA to pay off your loan. The loan must be paid off fully within two years.
There continue to be changes and updates; within the last week the Treasury announced that the expenses paid by PPP money would not be tax deductible. This essentially creates a double-taxation of owner compensation, surely an inadvertent consequence. The ADA and AICPA are lobbying for changes to this and many other subtleties, stand by for more clarification. At the end of the day, the PPP and EIDL are much-needed gifts that came at a time of hardship for dental practices and other small business owners, and assuming good intent of legislators wanting to provide assistance, we hope that common sense will prevail in the areas that are currently very gray.
If you have questions about PPP loans and your practice, please book a time for us to talk.