FAQs for Practices: Financial Relief Provisions in the Coronavirus Aid, Relief and Economics Security (CARES) Act
Updated January 14, 2021
The CARES Act and the subsequent COVID-19 Economics Relief Bill provide assistance to business owners with financial relief during the COVID-19 pandemic. The US Small Business Administration (SBA) and the Federal Reserve are administering several loan programs to provide financial relief to small and medium sized practices due to COVID-19. The FAQs below will assist you, your practice managers, and your consultants (e.g. accountants, lawyers) in identifying what is right for you. As the Administration develops additional guidelines, we will continue to make updates to this document.
What small business loan options are available for me now?
- The Paycheck Protection Program (PPP) was extended January 13, 2021 for small businesses up to 300 employees. If the first PPP was given, documentation must be provided demonstrating the full amount was used as authorized. Additionally, businesses will need to demonstrate a 25% reduction in gross receipts from comparable quarters in 2019 and 2020. Applications are accepted January 13 – March 31, 2021.
- Economic Injury Disaster Loans (EILDs) for businesses with less than 500 employees are available, although advance loans are not. The application will take approximately 2 hours to complete and requires collateral for loans above $25,000. The loan terms include one-year deferred interest, 3.75% interest for businesses (fixed), 2.75% for nonprofits (fixed), 30 year with no pre-payment penalty or fees. Funds must be used for capital and normal operating expenses.
- If you had a disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic payment deferments through March, 31, 2021. Interest will still accrue.
- The Debt Relief Program provides automatic payment for the principal, interest and fees of current and new 7(a), 504, and microloans issued prior to September 27, 2020.
- The SBA has a Small Business Tool for practices to complete to see if they qualify. Enter “621111” for the 6-digit NAICS code.
If I qualify for loans, how do I apply?
For SBA loans:
- Most of the loans are administered through local lenders identified by the SBA Local District offices. Search the eligible Paycheck Protection Program lenders to start.
- Paycheck Protection Program loan applications are available online to submit to your lender.
- Economic Injury Disaster Loans (EILDs) applications are available through SBA online. The application will take approximately two hours to complete and up to $10,000 can be requested as a loan advance.
- The other loan options need to be coordinated with your local bank or SBA Local District Office.
What documents should I prepare to submit when I apply?
For SBA loans:
- You will have to provide proof that your practice was in operation before February 15, 2020 with employees that received salaries and for whom you paid payroll taxes (i.e., Social Security, Medicare).
- Lenders will ask you for good faith certification that:
- The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
- You will use the loan to retain workers and maintain payroll or make mortgage, lease, and utility payments
- You do not have an application pending for a loan duplicative of the purpose and amounts applied for here
Is there anyone that can help me with the SBA loans?
SBA has resource partners: Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs) and SCORE mentorship chapters. To locate resources in your area:
- Go to https://www.sba.gov/local-assistance/find/ to get to the SBA Find Local Assistance search tool
- Do NOT enter a key word
- Enter your zip code
- In the “Provided By” dropdown menu, select:
- “Small Business Development Center” or “Women’s Business Center” for counselors and assistance with loan packages
- “SCORE Business Mentor” for local mentors, online advice, and webinars
- Call or email and request assistance
Can I get my loans forgiven?
Paycheck Protection Program loans may be forgiven if borrowers use the loans to maintain their payrolls and pay other specific expenses. A guide to loan forgiveness can be found here and you can download forgiveness forms and worksheets here.
Can I defer my payroll taxes?
- Businesses can defer their portion of the 2020 Social Security (6.2%) and Medicare (1.45%) payroll taxes into two payments due late 2021 and 2022. However, you are not eligible for payroll tax deferral if you receive a loan under SBA’s Paycheck Protection Program.
Are there other options available, like grants or additional loans?
- The Department of Health and Human Services was allocated additional federal relief funds for physician practices. See our Step-by-Step guide to check if your practice is eligible for funds and for more information on how to apply.
- ACOG recommends practices consult with local accountants and lawyers to determine the best action plan for their practice.
Where can I find additional information?
- ACOG’s online resource: Financial Support for Physicians and Practices During the COVID-19 Pandemic
- The US Chamber of Commerce has published useful resources related to the Small Business COVID-19 Emergency Loans
Follow this and more through social media @ACOGAction or online at www.acog.org/COVID-19.
Information on practice management during the COVID-19 pandemic is developing rapidly and ACOG will release updates to policy and funding opportunities as they arise. ACOG continues to support its members during this time. If you have any further question or concerns, please reach out to us and submit your questions at email@example.com or or visit ACOG’s Payment Advocacy and Policy Portal.