COVID-19 Small Business Loans Guide
CARES Act small business loan applications available now
The U.S. Small Business Administration resumed accepting Paycheck Protection Program (PPP) applications from participating lenders on Monday, April 27, 2020. ASPS members in private practices impacted by the COVID-19 outbreak are advised to prepare necessary materials to request assistance from the U.S. Department of the Treasury's Paycheck Protection Program (PPP) – a key portion of the CARES federal economic stimulus package.
If you've previously applied for a PPP loan through an SBA lender but have not been approved yet, check with your lender to see if they are maintaining a queue of applications during the lapse between round one and round two, or if you will need to reapply when the renewed funding comes through.
If you have not applied yet for a PPP loan through an SBA lender, have the application form filled out and your documentation ready to provide to your lender. If you have an existing relationship with an SBA lender, you should go to that lender first once the program reopens, but be prepared to try multiple lenders.
All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities and mortgage interest. Small businesses and individuals who are self-employed or independent contractors – including plastic surgeons – are eligible if they also meet program size standards.
Average Monthly Payroll information required to complete the application:
Established practices: For purposes of calculating "Average Monthly Payroll," most applicants will use their practice's average monthly payroll for the entirety of 2019 (excluding costs over $100,000) on an annualized basis for each employee.
In preparation to complete your lender's online application, you should prepare documentation of 2019 costs, broken down by month, related to:
- Number of full-time equivalent employees on payroll
- Dollar amounts of payroll costs
- Mortgage interest or rent payments
- Utilities costs
Note for new practices: Average monthly payroll may be calculated using the time period from January 1, 2020, to February 29, 2020 (excluding costs over $100,000) on an annualized basis for each employee.
Most banks are expected to require a pre-existing banking relationship with the applicant for a PPP loan; therefore, it is strongly recommended to first apply for a loan at a bank where you already have an account.
The program was launched in part to help alleviate the financial stressors brought by the COVID-19 pandemic – and specifically designed to help small businesses keep their workforce employed.
Businesses can apply through any existing SBA lender or through any federally insured depository institution; federally insured credit union; and Farm Credit System institution that participates. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Plastic surgeons should consult with their local lenders as to whether they are participating. For information on SBA loans, go to www.sba.gov.
These loans, which have a maturity of two years and an interest rate of 0.5 percent, will be fully forgiven if the funds are used for payroll costs; interest on mortgages; rent; and utilities (due to likely high subscription, at least 75 percent of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
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.
ASPS provides updated COVID-19 resources for members at PlasticSurgery.org/COVID19.