Call your banker now, you don’t want the money to run out before you get yours!
The $284 billion PPP2 refundable loan offering is now available for struggling small businesses, including medical practices. Just as in the first round, most PPP2 loans use the same multiplier of 2.5 times a company’s average monthly payroll for 2019. This time there is also increased access to PPP for minority, underserved, veteran, and women-owned practices/businesses and added ways you can use the funds. To be eligible you must:
- Have 300 or fewer employees
- Suffered at least a 25 percent drop in quarterly revenue in ANY quarter from 2020 relative to the same quarter in 2019
- For those who received funds from the first PPP offering, eligible second-draw borrowers must have used or will use the full amount of their first PPP loan on or before the date on which the PPP Second Draw loan is disbursed
Calculating Your Revenue Loss
Calculating your revenue loss can be tricky so make sure your CPA and/or banker agree on the numbers. This time you may now use your 2020 payroll data as well, potentially maximizing your loan amount. Calculating revenue loss; pick ANY single quarter from 2020 where your practice/group revenue dropped at least 25 percent OR you can choose to annualize your numbers (compare your 2020 revenue from 2019 numbers). Though we believe these are the rules today, always triple check with the SBA (link below), your CPA, and your banker.
View the latest information from the SBA here for more information.
Even if you didn’t apply for a PPP loan for your practice the first time, you really need look into it and to act now!
Use of Funds
The use of funds has been expanded a bit this time and now includes payroll costs, mortgage interest expense, rent, utilities, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures.
Expect Some Confusion & Clunkiness With the Rollout
Your banker will likely be overwhelmed with requests for information and help in processing applications but don’t take the chance of you falling through the cracks – CALL THEM! Expect a bit of chaos and confusion though as everyone tries to set up processes while making required adjustments and enhancements to their systems. The good news is that some borrowers using the same banker as their first PPP lender, may even see reduced paperwork requirements. Adding to the likely frenzy will be a lot of “elbowing” by everyone to make sure they get to the front of the line, be prepared to do a little of that yourself.
If your banker isn’t as responsive as you need them to be, perhaps give them a little room for understanding, but you may also be well served to try find another one to hedge your bets while you wait! You don’t want the money to run out before you get yours! Make sure you get on their radar, confirm they are indeed participating, and get your application submitted ASAP.
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