Have you received a PPP Loan? Once you receive these funds, the real work begins.
Ollin Sykes and Scotty Sykes provide early insights on what pharmacies will need to track and report regarding use of PPP funds. This documentation is required in order to apply for loan forgiveness following the eight-week covered period. Your goal is 100% forgiveness when you have proper documentation and accounting procedures in place.
Our pharmacy advisory services team is developing general operating procedures for pharmacies that do receive PPP loans. You may be interested in our blog post about PPP loans and more through Sykes & Company, P.A. COVID-19 advisory updates.
If you prefer to read this content, the video transcript is below.
[Ollin] The forgiveness aspect is the most critical part of this entire process here. Once the funding occurs, we’ve got eight weeks to utilize those funds as statutes indicate. Of course, essentially, the intent is to take at least 75% of your funds for payroll, at least for those employees that have annualized $100,000 salary or less.
You obviously can pay the employer health. You can do the retirement plan contributions. You can do cash balance plans if you happen to have one, by the way. State unemployment taxes, et cetera. Rent, and in that rent I learned just this morning that utilities are included, internet is included, telephone is included, and “transportation costs” are included. That’s not yet defined.
So, further guidance we’re sure is going to be coming out on a lot of this stuff in the coming days and weeks, but supporting and documenting how you spend the funds once they’re received is going to be quite critical. Scotty, what say you on that?
[Scotty] You want to build a case for the bank. When you go ask the bank for forgiveness, you want to have it so it’s as easy as possible and they can essentially rubber stamp it, and get you forgiveness all the way through. And that’s going to include making sure your documentation is in line, you’ve got every supporting documentation for the expense itself, you’ve got an accurate accounting of those proceeds and how they were used.
And then hopefully, you know, when you submit it to the bank you can get that, get it forgiven pretty easily, pretty quickly, and you’re on your way. So again these monies, once it’s forgiven, is tax-free money to the pharmacy, and you do not have to pay it back.
[Ollin] And for any part that is not forgiven, you’ve got a six-month deferral of interest and then a two-year payment of the note back at 1%. But the key here is to get all of it forgiven.