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CARES Act Includes Forgivable Loans for Small Businesses
"Paycheck Protection Program" Loans up to 250% of Monthly Payroll Costs, Up to $10 Million

START THE PROCESS AS SOON AS POSSIBLE! Contact an SBA 7(a) Approved Lender (See Below) to See If They Will Offer These Loans and What Documentation You Will Need to Apply!

Today, the U.S. House of Representatives passed the CARES Act, legislation passed by the Senate earlier this week that includes approximately $350 billion for SBA guarantees of forgivable loans for small and medium sized businesses. The "Paycheck Protection Program" (PPP) loans up to 250% of monthly payroll costs, up to a possible $10 million, and may be forgiven if the business maintains its payroll through June 30, 2020. The program is designed to keep people employed and off the unemployment rolls.

President Trump is expected to sign the bill later today.

Eligible businesses would include those with 500 or fewer employees, self-employed individuals, and "gig economy" workers. There is no minimum number of employees needed for a PPP loan.

No collateral or personal guarantee is required to obtain one of these loans, which can be used for:

  • Payroll costs (salary, wages, and payment of cash tips up to an annual pay rate of $100,000 for an employee)
  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Employee salaries, commissions, or similar compensations
  • Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation) incurred prior to February 15, 2020
  • Rent on a lease agreement (in force before February 15, 2020)
  • Utilities (for service that began prior to February 15, 2020)
  • Interest on any other debt obligations that were incurred before the covered period

Applicants will be required to make a "good faith certification" that:

  • The uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient
  • Funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments
  • They are not receiving duplicative funds from another SBA program (excluding an Economic Injury Disaster Loan, to the extent that the disaster loan was used for a purpose other than those permitted for PPP Loans)

PPP loans will be made by lenders currently approved as 7(a) lenders (many banks and other direct lenders) with no additional SBA approval required. There are currently more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions. PPP lenders are only required to consider if the applicant was in business on February 15, 2020, and either had employees or paid independent contractors. Applicants will also not need to show that credit is available elsewhere or demonstrate an ability to repay the loan.

Loan Forgiveness
PPP loans are eligible for loan forgiveness equal to the amount spent in the 8-week period after the origination of the loan on approved costs (see above). The forgivable amount is reduced proportionately by any reduction in employees during the covered period (compared to certain prior periods). An amount forgiven under the CARES Act will not be taxable income. Amounts not forgiven after one year are carried forward as an ongoing loan, subject to a maximum rate of 4% interest and mature no later than 10 years after determination of the amount not forgiven.

Financial Institutions
Banks and other direct lenders are incentivized to make PPP loans under the CARES Act through SBA guarantees of the loans up to 100% for the remainder of 2020, waiving certain fees, limiting lender liability, and certain processing fees.

Other Benefits of the PPP Loan

  • Borrowers who re-hire workers laid off during the pandemic will not be penalized for having a reduced payroll at the beginning of the loan period.
  • Payments can be completely deferred for at least six months, but less than one year.
  • If the economy is still in trouble after eight weeks, this program can be extended and additional funds requested.

Approved 7(a) Lenders
For a list of Michigan SBA-approved 7(a) lenders (as of February 29, 2020) by county, click here.

Please note: Chiropractic Federal Credit Union IS NOT an SBA-approved 7(a) lender. However, they do have other lending options available.

Other Benefits of the CARES Act
Direct Cash Payments, Enhanced Unemployment Benefits in the Act

The CARES Act also contains other beneficial provisions, including:

  • Direct cash payments to Americans. People making up to $75,000 a year are expected to receive checks for $1,200. Couples making up to $150,000 would receive $2,400, with an additional $500 per child. The agreement removes the phased-in provision that would have excluded lower-income Americans from receiving the full benefit. The payments would decrease for those making more than $75,000, with an income cap of $99,000 per individual or $198,000 for couples.
  • Student Loan Relief. All loan and interest payments can be deferred through September 30, 2020, without penalty to the borrower for all federally owned student loans. You will have to contact your loan servicer and ask for a forbearance. Contact your loan servicer for more information.
  • $100 billion in assistance for hospitals
  • $500 billion in aid to corporations hurt by the outbreak (including airline companies and cruise lines)
  • $150 billion for state and local stimulus funds
  • Unemployment funds bolstered for four months by increasing payments and extending the benefit to those who typically do not qualify, such as gig economy workers, furloughed employees and freelancers. The bill would increase the maximum unemployment benefit that a state gives to a person by $600 per week and ensure that laid-off workers, on average, will receive their full pay for four months.

Immediate Relief for Rural Facilities and Providers Act
Unfortunately, the CARES Act does not contain the language of the Immediate Relief for Rural Facilities and Providers Act.

This legislation would: have

  • Provided stabilization and relief for all providers, including chiropractors with an emergency, one-time grant for all providers and ambulatory surgery centers equal to their total payroll from January 1 - April 1, 2019
  • Provided funding for all physicians and providers, including chiropractors by authorizing the Small Business Administration to provide low interest loans to providers and ambulatory surgery centers at a 0.25% interest rate that will not accrue until two years after the COVID-19 pandemic has ended.

There will most likely be additional legislation needed to ease the economic burden caused by the coronavirus pandemic, so stay tuned.


Disclaimer: The Michigan Association of Chiropractors is a professional association advocating for the rights of chiropractors and their patients across the state of Michigan. We are NOT a state agency or regulatory body. We are merely informing our membership regarding what they are allowed to do during this difficult and confusing time.

The information we provide during this pandemic is derived in conjunction with our governmental relations and legal experts, developed after examination of all official releases of information from the State of Michigan and in consultation with said experts and representatives from state government. Please refer to our emails and website for the latest information, free from speculation and the rumors currently circulating in the wake of official state actions.

Rest assured that we will continue to advocate for the profession at the highest levels, with the health and well-being of you and your patients, as well as the overall stability of the health care system, foremost in our efforts.

 
 
 

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