COVID-19 Paycheck Protection Program Application Available Now

As part of the CARES Act, which is the U.S. economic relief and stimulus package recently passed into law, the Department of the Treasury has released a Paycheck Protection Program (PPP) loan application and supplemental information on its website to help small businesses.

PPP Loan Application
PPP Borrower Guide

This program is in the form of a 100% federally guaranteed, low-interest and potentially forgivable loan. It can apply to independent and community pharmacies and other employers with 500 or fewer employees.

Eligible applicants can receive funds through participating SBA (7a) lenders and other new federally authorized lenders. If a PPP loan is right for you, we can help you identify resources because CPAs are considered federally approved agents to assist loan applicants. 

Key features of the program include:

• 2-year term loans available with 1% interest available through June 30, 2020
• Loan amounts up to 250% of a monthly average 2019 period computed payroll amount (including certain benefits) with loans not to exceed $10 million
• Waived personal guarantees and fees
• Potential loan forgiveness if loan amounts are used for payroll, retirement benefits, employer portion of health insurance premiums, some pre-existing debt, rent, mortgage and utility costs during an 8-week covered period
• Non-taxability for federal purposes of the loan forgiveness

A primary consideration for eligibility will be showing evidence that your pharmacy business has been adversely financially “affected by the Coronavirus.” Eligibility requirements will be formalized through the application and underwriting process.

Another consideration provides a limitation on a borrower from receiving this assistance and also receiving an Economic Injury Disaster Loan (EIDL) through the U.S. Small Business Administration (SBA) for the same purpose. However, it allows a borrower who has an EIDL loan unrelated to COVID-19 (such as for natural disaster relief) to apply for a PPP loan, with an option to refinance that EIDL loan into the PPP loan.

Economic Injury Disaster Advance Loans

Currently the SBA is also offering COVID-19 related emergency EIDL grant awards of up to $10,000. If you apply for an EDIL related to COVID-19, these advance awards are available for eligible applicants to cover emergency payroll and other cash flow needs within three days of approval, and they do not have to be repaid.

Keep in mind that if you choose not to accept an EDIL loan and instead apply for a PPP loan, you can still keep the EDIL grant advance. However, any EDIL grant advance you receive now would be subtracted from the forgivable portion of your PPP loan in the future. EIDL applications are made directly through the SBA, and you can view that information here.

Sykes & Company, P.A. is committed to helping you navigate your options, including possible banking referrals and the financial and tax documentation you may need. Contact us with your questions.