A bill signed into law Friday makes loans obtained under the Paycheck Protection Program (PPP) more accessible to small businesses, such as medical practices.
The law, introduced in the U.S. House of Representatives by Rep. Chip Roy (R-Austin) last month, eliminates certain restrictions on the loan terms and allow businesses more time to use the funds.
The Texas Medical Association has taken no formal position on the law, but it addresses many of the concerns and frustrations TMA members have expressed over the terms of the PPP loans. At an hour-long TMA TeleTown Hall meeting earlier this month, PPP was overwhelmingly the topic of discussion.
“The Paycheck Protection Program is providing essential capital to millions of small businesses across the country. Unfortunately, for many of these business owners … the terms are too inflexible to provide the help they need to weather the economic storm,” Representative Roy said in a statement. “The Paycheck Protection Program Flexibility Act lifts these arbitrary restrictions to provide critical flexibility to small businesses that are simply trying to survive.”
The Small Business Administration (SBA) announced the program in March to help small businesses that were affected by COVID-19.
Under the original terms of the program, PPP loans provide 2.5 times a practice’s average monthly payroll costs through June 30. They have a maturity of two years and an interest rate of 1%. Loans 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. Also, no more than 25% of the forgiven amount may be for non-payroll costs.
The new law changes several conditions, including:
- Allowing forgiveness for expenses beyond the eight-week covered period;
- Eliminating restrictions limiting non-payroll expenses to 25% of loan proceeds;
- Eliminating restrictions that limits loan terms to two years;
- Ensuring full access to payroll tax deferment for businesses that take PPP loans; and
- Allowing loan forgiveness for businesses that make a good faith attempt to rehire employees, but are unable to do so.
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, announced in late April, is still available.
The Texas Medical Association has created a podcast that will help answer many of the questions you might have about PPP loans. The podcast – which is hosted by Heather Bettridge, associate vice president of TMA Practice Management Services – is accredited for 0.5 AMA PRA Category 1 Credits™.
If you have more questions about the loans or other ways to protect 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. It is accredited for 3 AMA PRA Category 1 Credits™ and 3 Ethics credits.
As with most of TMA’s CME programs, the podcast and toolkit are free for TMA members and their practice staff thanks to a generous sponsorship by the Texas Medical Association Insurance Trust.
You can find the toolkit and other tools, resources, and information on the practice viability section of the TMA COVID-19 Resource Center.