If you received a loan of less than $2 million from the Small Business Administration (SBA) Paycheck Protection Program (PPP), it likely will not be subject to an audit or potential penalties and damages, the U.S. Treasury Department said.
In an updated frequently asked questions (FAQ) document, the department said loans of less than $2 million automatically will qualify for “safe harbor” status.
Those businesses “will be deemed to have made the required certification concerning the necessity of the loan request in good faith,” question 46 says.
Loans greater than $2 million “will be subject to review by SBA for compliance with program requirements,” the FAQ says. If the review finds practices did not meet the requirements for the loan, “SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness.”
PPP loans provide 2.5 times your practice’s average monthly payroll costs (excluding salaries of $100,000 or more) through June 30 and are capped $10 million.
It will be fully forgiven if the funds are used for payroll, interest on mortgages, rent, and utilities. Forgiveness is based on maintaining or quickly rehiring employees and maintaining salary levels, and will be reduced if full-time headcount declines, or if salaries and wages decrease.
SBA late last week opened a portal where you can register for loan forgiveness. You can find the portal, and instructions, on the Treasury Department website.
SBA made a first round of PPP loans available in late March, but those funds were completely allocated by April 16. An additional $310 billion was made available in late April.
To help you make informed decisions for your practice during the pandemic, TMA has published a Practice Viability Toolkit with up-to-date information and resources.
The toolkit includes a section on cash flow, including SBA loan assistance, lines of credit, payment deferrals, loan refinancing, and loans from private banks.
You can find the toolkit and other tools, resources, and information on the practice viability section of the TMA COVID-19 Resource Center.