As the owner of a medical practice, how much can I borrow from the government under the CARES act, and will any of the loan be forgiven?
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, recently passed by Congress, allocates $350 billion to help small business keep workers employed during the COVID-19 pandemic. The “Paycheck Protection Program”, contained within the act, provides 100% federally guaranteed loans to small business, including medical practices, that are less than 500 employees. These loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterwards.
If your medical practice meets the criteria set out in the Act, you could borrow up to 2.5x your monthly payroll costs. Your payroll costs include the amount you pay for salaries, wages, vacation or sick leave, group healthcare, retirement benefits, and payroll taxes. Borrowers are eligible to have their loans forgiven up to the amount of the principal borrowed. Loan forgiveness will be capped at what the borrower spends in the 8 week period beginning on the date of the loan, on payroll costs, interest on mortgage, rent, and utilities.