Some of you here know John Canning (PCC’s founder) - he’s always good for some interesting insight (we’ve been exchanging emails today about some of the finer details of the CARES package, particularly those focused on much larger entities).
Here’s what he shared with PCC clients today. The attachments are some of the better documents I’ve seen so far.
Greetings -
I’ve spent the past few hours reading through the COVID-19 Stimulus Bill (also known as the 2020 CARES Act) that was signed in to law this past Friday. You’ve probably heard that everyone in America will receive a check in mid-Aril ($1,200 per tax payer, $500 per dependent).
The Act also provides a minimum grant of $10,000 of additional support to all small businesses, non-profits, and the self-employed. You have to apply through the Small Business Administration in order to receive this support. I have attached a both a guide to the CARES Act, prepared by the Senate, and with an FAQ, at the end of this message.
As an independent pediatrician, you and/or your business qualify for financial support under the CARES Act. The intent of the Act is to provide financial relief to any and all individuals and businesses that are going to be disrupted by the COVID-19 pandemic. Let’s face it, that’s everyone in the United States. This is why they are sending a check to every family in the US, and why the financial support for businesses and the self-employed outlined below is tied to the size of the entity (under 500 people) and does not require you to quantify how much you’ve been disrupted by all of the steps taken to contain COVID-19.
I encourage you to speak with your accountant or lawyer, or whoever helps you prepare your tax returns, so that you can figure out which of these programs would be best for you and your practice. I also urge you to apply for this support. The government is going to spend the money. As an independent pediatrician, you definitely deserve our country’s support.
The Act creates three additional programs available to small businesses, non-profits, and self-employed individuals:
The Paycheck Protection Program will lend you 250% of your average monthly payroll from early 2019 (2/15/19-6/30/19). It packages it up as a loan, payable over 10 years at a fixed interest rate of 4%. Depending on the number of people you employ later this year, the federal government will forgive some or all of this debt. At most, they will forgive up to 8 weeks of your 2020 payroll, benefit, rent, and utility expenses.
If you are self-employed and earned money in 2019 between 2/15 and 6/30, you can borrow two and a half months of your average earnings, up to $20,800, which can then be forgiven after the pandemic is over. See the FAQ for more details.
The Small Business Debt Relief Program will cover your next six monthly payments on most SBA guaranteed loans. If you do not have an SBA backed loan, but need to borrow money, this would be a good time to apply. Once the loan is approved, the SBA will automatically make the next six monthly payments.
The Economic Injury Disaster Loan and Emergency Economic Injury Grant Program provides an emergency grant of $10,000 and an expedited SBA Loan application process for eligible businesses and individuals This is an alternative to the Paycheck Protection Plan and is set up to provide the $10,000 within 3 days of you applying for the loan/grant. If you are self-employed or work as a contractor, then this is probably the program for you.
An organization would apply for the Paycheck Protection Program through an SBA lender, such as People’s United Bank (a bank here in VT). The Debt Relief program is automatic if you have an SBA loan in place. You apply for the[ Economic Injury Disaster Loans and Grants]
(https://www.sba.gov/disaster/apply-for-disaster-loan/index.html) on the web, but the website is not yet ready for applications.
The process of applying for the Economic Injury loans/grants is a bit weird. Once the website is working, you can apply on-line at:
https://www.sba.gov/disaster/apply-for-disaster-loan/index.html
When you apply, you apply for an “Economic Injury Disaster Loan.” This loan can be for any reasonable amount, which means you have to demonstrate to the bank/SBA that you will be able to repay the loan as outlined in your application. In the process of applying, you request an “Emergency Economic Injury Grant” advance in the amount of $10,000. The advance then has to be provided to you within 3 business days. You get to keep the advance whether your loan is approved or not.
This is a tumultuous time for everyone in the country and it is going to remain that way for some time. Please talk with your accountant or lawyer to figure out which program will work best for your situation and then apply for it. As I said before, you and your coworkers all deserve the support being offered so please take advantage of it!
I wish you and your families all the best!
Sincerely,
John Canning
Vermont, USA
small-business-owner-s-guide-to-the-cares-act-final-.pdf (237.6 KB)
paycheck-protection-program-faqs-for-small-businesses.pdf (65.4 KB)