When to File PPP Forgiveness Applications

06/24/2020 3:40:04 PM

We finally received a TINY bit of guidance on the PPP loans and when to file PPP forgiveness applications. 

It’s true! The details are below. BUT we are not recommending you be in any big hurry to file for forgiveness. Why?

  • We do NOT recommend using the 8-week covered period because of the complex application process. Only if you have extenuating circumstances would we recommend this path. For instance, if you are planning to sell your practice and need forgiveness first, or you know your FTE count will be too low at the later 24-week date, then this might be recommended. 
  • We are still HOPEFUL there will be blanket forgiveness for PPP loans under $150K. This would negate the application process entirely for many recipients. It could be wishful thinking certainly. Nonetheless, why spend energy on something that may turn out to be unnecessary?  

With that said, here are the updates…

Recent guidance released by the Treasury Department has clarified when PPP borrowers can apply for forgiveness.

Here are some scenarios:

  1. Submit your forgiveness application before the Covered Period ends.
    • If there are Salary/FTE reductions, you must account for those reductions for the full 8 or 24-week period. Borrowers are not allowed to prorate reductions when applying before the Covered Period ends.
    • The forgiveness amount requested must be spent or incurred in the period stated on the application. For instance, a borrower applying 2 weeks before the Covered Period ends cannot include anticipated costs for the remaining 2 weeks.
  2. Submit your forgiveness application as soon as the Covered Period ends. 
    • This option is ideal for borrowers who didn’t reduce wages or FTE during the Covered Period, and who don’t need to wait for the Safe Harbor date.
  3. Submit your forgiveness application within 10 months after the Covered Period ends.
    • This option gives borrowers a chance to restore wage and FTE amounts by 12/31/2020, thus limiting forgiveness reductions.
  4. Submit your forgiveness application after the 10-month deferral period.
    • If borrowers do not apply for forgiveness within 10 months after the Covered Period ends, payments on principal and interest will begin.
    • Even if payments have been made after the deferral period, borrowers can still apply for forgiveness before the loan matures.
  •  

Apply for HHS Provider Relief Now

06/24/2020 9:31:56 AM

The HHS Medicaid/CHIP Provider Relief Fund application deadline is a little less than a month away. But it’s vitally important to start the application process sooner rather than later! 

The first step in applying for payment is registering an account through the HHS Provider Relief Fund Portal. Once you create the account, you will have to provide necessary nonfinancial information to HHS to validate eligibility for the Fund. Validation can take up to 15 days per HHS, so starting soon is important. Submit validations no later than by July 5 to meet the July 20 deadline. 

Once validated, you will provide HHS the practice’s financial information needed to calculate your relief payment amount. After payment is received from the Fund, you will have 90 days to accept the payment by attesting to Terms and Conditions.

HHS Application Due 7/20/2020

06/19/2020 10:09:20 AM

Just a reminder!  If you are a Medicaid/CHIP provider, you should apply for the Relief Fund payment authorized by the CARES Act.  As we posted previously, round one of the distribution went primarily to physicians and hospitals, but it has now been opened up to dental providers.  PLEASE NOTE: Our original post, now revised, listed the due date for application as 7/3/2020, but the due date is actually 7/20/2020.  So you have more time! We don’t know if there was a change, or the 7/3 date was in error, BUT THE CORRECT DUE DATE IS 7/20/2020.

PPP Tracker Spreadsheet Updated

06/18/2020  7:20:31 PM

We have updated the PPP tracker spreadsheet, find it HERE. As a reminder, the revised PPP rules allow for a 24-week period versus the original 8-week period. The goal now is to use PPP funds exclusively on payroll over the 24 weeks.  This will allow for the easiest forgiveness application process!

Not Too Late for a PPP Loan

06/16/2020 2:02:38 PM

It’s not too late for a PPP loan, here’s why. As you may recall, the PPP program was modified from an 8-week covered period to a 24-week period covered period.  This change makes it very easy to use all PPP proceeds on payroll over a 24-week period and achieve 100% forgiveness of the loan.  It will require very little documentation and a relatively easy application process.  For these reasons, if you have not applied for a PPP loan yet, consider doing so now! The deadline for application is June 30, 2020.  There is currently over $1 billion still available in the SBA PPP fund.

COVID Positive Team Member: Steps to take

06/12/2020 9:40:06 AM

Practices are re-opening and getting used to new recommended and required safety precautions.  It’s a good time to think about this scenario—when a team member tests positive for COVID-19.  There are procedures in place to prevent potentially sick employees from coming to work or beginning a shift.  But there still exists the unfortunate possibility of an infected team member encountering patients.  The TDA and ADA have released guidelines in the event this happens in your practice.

A summary of steps to take:

  1. Mandate the infected employee quarantine for 14 days and follows all medical recommendations.
  2. Notify all patients who may have had close contact with the infected employee.
    • Recommend a 14-day self-quarantine and that they contact their physician if they experience symptoms.
    • “Close contact” is defined as 6 feet or less.
    • The CDC has provided a sample letter here.
    • Document your communication with the patient.
  3. Notify staff who were working with the infected employee.  Recommend a 14-day self-quarantine for any staff member who may have come into close contact with the infected employee.
  4. Clean and disinfect the facility according to CDC guidelines for Dental Practices.

Click here for an expanded 8-step guide from the ADA.

For more information, this TDA page explains how to handle a team member testing positive for COVID-19.  It includes protocols, helpful resources, and a script for communicating with patients.

Medicaid Dental Provider Relief

06/11/2020 6:50:08 PM

Yesterday the Department of Health and Human Services (HHS) announced that qualifying dentists are now eligible to receive payments under the Medicaid Provider Relief Fund authorized in April by the CARES Act.  This money is not a loan and will not have to be repaid.

Click here for eligibility requirements

You will need to submit these 3 items:

  1. Most recent federal income tax return for 2017, 2018 or 2019.
  2. Payroll tax return—one of the following
    1. Form 941 for Q1 2020
    2. Form 940 [we assume for 2019 but their site fails to specify] OR
    3. A statement explaining why the applicant is not required to submit either form (e.g. no employees).
  3. FTE Worksheet.

Additionally, you may need to submit:

  1. If required by Field 15, a Gross Revenue Worksheet . NOTE:  If you did not acquire or dispose of any subsidiaries between the beginning of your tax return date (based on #1 above) and now, this will not apply to you.  It will, frankly, not apply to most of you.

If you are eligible, submit your application as soon as possible.  The deadline for submission is July 20, 2020.

Access the portal here.

Access the application here.

Access the instructions here.

Access general information here.

Access FAQs here.

Production Survey Part 2

06/11/2020 12:00:28 PM

After reviewing the results of our 6/8/2020 survey, we were pleased and surprised to hear so many of you are back at 100% pre-COVID production levels!  BUT HOW are you accomplishing this?  With all the extra time to comfort patients and sterilize ops we feared production could not reach pre-COVID levels.  But we are thrilled to see the potential full recovery can be achieved for the dental community.  If you would give us just 2 more minutes of your time we would love to dive deeper.

TAKE THE SURVEY

Paying COVID Employees

06/10/2020 2:35:06 PM

A few of you have contacted us with employees who either have COVID, or have been exposed to COVID and are unable to work. Paying COVID employees involves following unique rules. Under the H.R.6201 – Families First Coronavirus Response Act, they are entitled to 10 days of federally mandated and subsidized Sick Pay.  

Here’s how paying COVID employees works:

  1. Pay them their normal hourly rate up to a maximum of $511 per day.
  2. Pay them for the hours they would be working according to the amount the practice is currently open.  For instance, if they previously worked 30 hours per week and the practice is now open only 20 hours per week, you must pay them 20 hours per week for 2 weeks.  If the practice is open as much as pre-COVID, pay them for their their normal working hours up to 40 hours per week.
  3. If you use a payroll provider (always recommended) be sure to enter this as Emergency Paid Sick Leave (or something to that affect—your payroll provider can help you identify the correct coding if needed).  Correct coding is important in this case.
  4. You are entitled to a credit for the total sick wages paid against your payroll tax deposits.  Example: If the employee is paid $2500 for the 10 days, you can short your payroll tax deposits for the remainder of 2nd quarter until you have recouped your $2500.  Your payroll provider may do this for you automatically.  If not, there is a form that can be filed to receive the refund back from the IRS for the amount of credit you are due.  In addition to wages paid, the credit should include any health insurance premiums the practice pays on their behalf.  (Note: Insurance deducted from the employees’ pay is not includable in the credit.) 
  5. No specific paperwork needs to be filed with any government agency to track this.

Production Survey Results

06/10/2020 10:28:10 AM

Our practice production survey results are coming in. So far things look promising. 30 days following reopening their practices, most respondents are reporting production levels at 70% and higher of pre-COVID production levels. We know 2020 will go down in history as a very tough year for small business owners, including dentists. However, maybe things aren’t as bad as they once seemed and maybe, just maybe, we can turn 2020 around before the end of the year. If you haven’t taken the survey, please take a minute and tell us about your practice.

SURVEY RESULTS

TAKE THE SURVEY

PPP Changes Await Final Signature

06/05/2020 2:46PM

Yesterday the Senate passed the PPP modifications that the House passed last week, now these PPP changes await the final signature. Due to the overwhelming bipartisan support, it is expected that the President will sign the bill into law. The modifications require a new strategy but provide significant opportunity to ensure practices receive 100% forgiveness. Of course, these changes will still require the much-awaited guidance to be issued by the Treasury and SBA. But it does allow us more time to wait for it.

Summary of changes to the PPP loan program: 

8-week covered period extended to 24 weeks 

Practice tip: The loan was based on 2.5 months, approximately 11 weeks, of payroll, and you now have 24 weeks to spend it. This eliminates most of the challenges of the program and allows most practices to utilize 100% of the PPP money on payroll and ensure total forgiveness.

75% rule reduced to 60%

Previously 75% of PPP proceeds had to be used on payroll or the forgiveness amount would be reduced. But now only 60% of the PPP proceeds must be used on payroll. There’s a caveat though! It’s now all or nothing. If you do not spend 60% of the funds on payroll you will get ZERO forgiveness. This is a drastic change from the previous 75% rule.

Practice tip: Due to the 24-week covered period, this rule should not be a problem. We recommend trying to spend 100% of the loan amount on payroll over the 24 weeks. That will make the application process much easier since you will only need to provide payroll reports to support your forgiveness application.

Rehire date moved from 6/30/20 to 12/31/20

Practice tip: Your practice now has until 12/31/2020 to rehire employees back to the 2/15/2020 level.

Required FTE goal for the rehire exemption is reduced if you are unable to rehire people or business has declined due to HHS, CDC, or OSHA requirements regarding COVID-19

Practice tip: Continue to plan on rehiring people by 12/31/20. However, if guidelines are issued that restrict the number of people allowed in the office, this will give you flexibility in adjusting staffing levels to a new normal. This exception is new, and we will need new guidance to clarify it.  

New PPP loans will have a minimum maturity of 5 years

Practice tip: With the extension to 24-weeks, the goal should be 100% forgiveness of the PPP loan. However, if you do not attain this goal, consider contacting your bank to modify the term to 5 years if your loan was finalized under the shorter 2-year term. However, we recommend avoiding this unless truly needed. 

Of note regarding changes to the PPP program:

  • We still don’t know about
    • payments to related parties
    • retirement
    • miscellaneous other payments…but none of this may matter now.
  • The $15,385 per person payroll limit may be increased to $46,154. We recommend limiting the expected forgivable portion to $15,385 per person until we get guidance since the new 24-week period should allow you to utilize all other PPP proceeds on staff payroll.  
  • The forgiveness application will be completely changed.
  • The PPP Expense Tracker tool will be updated.
  • Although utilities, health insurance, SUTA, and other small costs are still eligible, they become less important. Rather than worry about tracking small receipts, focus on big items that are easy to provide to the lender—payroll primarily, and rent. This should make the forgiveness application process quick and easy.  
  • Forgiveness applications won’t be filed until after the end of the year due to the 12/31/2020 rehire date.
  • At this time items paid with PPP funds are not deductible expenses. There was previously talk that Congress would revise it so the items would be deductible. However, given the favorable changes to the program passed here, there may be less motivation to do so.

One of our ADCPA colleagues has a great webinar on the changes outlined in this post. Keep in mind, though, they are in Massachusetts where practices were not blessed to reopen as early as states like Texas. Click here to see the recorded webinar.

PPPs Below $150K: Auto-forgiveness Requested

06/04/2020 11:11:07 PM

The Consumer Banking Association and the Banking Policy Institute recently sent a letter to the Small Business Committees in both chambers of Congress.  Their goal was to encourage legislation that will essentially auto-forgive PPP loans below $150,000.  The motivation seems to be that these smaller loans will cost the banks more to service than they will earn at a 1% interest rate.

Whatever their motivation, it would be great for many of you as well.  Remember, the intention of the PPP program was to help keep people on payroll.  It will now be fairly easy to spend all the PPP proceeds on payroll and, thereby, fulfill its purpose.  Forgiving these smaller loans automatically will reduce documentation headaches for both your practice and the banks.  Win-win!  (“Why will it be easy now to spend all the PPP proceeds on payroll?” you ask.  Because the period has been extended from 8 to 24 weeks.  Yes, it’s true-details coming in the next post!)  

This letter appears to be the only action so far.  No bill is drafted or referred to a committee in Congress, meaning there’s nothing official in the works yet.  We’ll be watching for you!  

Tentative PPP Program Changes Announced

06/01/2020 11:58AM

Thursday, the House passed H.R.7010 to modify certain provisions related to the forgiveness of loans under the Paycheck Protection Program (PPP). The tentative PPP program changes announced would extend the current 8-week loan forgiveness period, as well as lower the payroll portion from the current 75% requirement.  This bill has not passed the Senate or been signed by the President and is, therefore, not enacted.  We expect some changes to the final bill.  But it is very likely to pass in some form since there is bipartisan support on this issue.  The bill will include other changes as well, and we will put out those details once they are final.  No need to fill our valuable brain space with hypotheticals!  Click to read the entire Bill.

Paying Employee Bonuses Using PPP

05/27/2020 2:47PM

There are still plenty of questions to be answered regarding PPP forgiveness details!  BUT recently released regulations have addressed the issue of paying employee bonuses using PPP proceeds.  The Department of Treasury has issued a ruling stating that hazard pay and bonuses are forgivable payroll costs during the PPP Covered Period.  This is a great answer to a question you have been asking.

This ruling is a very broad interpretation of compensation.  But it provides a good strategy to help achieve the 75% payroll costs requirement for full PPP loan forgiveness.  This compensation rule also applies to furloughed employees.  So providing hazard pay, or keeping your employees on payroll even if they didn’t work, will still qualify as a forgivable payroll expense.  The caveat to remember when paying any type of compensation–$15,385 per employee is the maximum forgivable amount during the Covered Period.

Your next question:  Does that mean I can pay my spouse a bonus and include it in forgivable compensation?  Unfortunately, that question remains answered.  We expect the SBA to issue specific guidance concerning related parties…someday.

Retention of PPP Documentation

05/26/2020 5:00PM

So, what are the requirements for the retention of PPP documentation? The SBA requires that PPP borrowers retain all related loan and forgiveness documents for 6 years after:

  • The date of full forgiveness OR
  • The date the loan is fully paid off if only partial forgiveness was achieved.

That’s a LONG time.

Here is what that entails for loans under $2 million:

  • Documentation submitted with the PPP loan AND forgiveness application
  • Payroll costs from the previous 12 months before applying AND during the 8-week Covered Period, which includes:
      • Salary/wages paid to employees (capped at $100k annually for each employee)
      • Health insurance premiums paid (if not taken out of the employees pay)
      • Employer matching retirement expense
      • State/local taxes assessed on employee wages (TWC/TXSUI for Texas dentists)
  • Any documents from EIDL’s you received in 2020 (including the EIDL advances for PPP loans). Follow the details regarding Forgiveness Application documentation that was posted previously. To make life easier, make two copies when gathering all the required documents needed – one for submission and one for record retention.
  • Documentation showing material compliance with PPP requirements

You are in PPP compliance if you:

  • Keep up with the documentation described above
  • Keep check stubs/receipts verifying you have been spending your loan on the required items (payroll, rent, mortgage, utilities)
  • Can verify the certifications made on the original loan application, and
  • Have not received a PPP loan twice for the same business if you applied to multiple banks

It wouldn’t hurt to review the loan documents from your PPP lender to make sure that the bank doesn’t require any sort of additional documentation for their records.

Keeping up with these items is vitally important for the next 6-7 years. While the SBA has indicated that their audit resources will be mostly dedicated to borrowers who have larger loans (over $2 million), the SBA has the authority and right to access and review the described items above for any PPP borrower during the 6 years.