CARES Act: Program Updates April 2020
[Disclaimer] This article was written to the best of our knowledge with the latest news released from the Federal government. There are many moving parts to both of these programs, and as the days and weeks pass, there may be more clarification to some parts that are vague or confusing. Please be mindful, that I have tried to gather as much information that I can, and may miss some details worth noting.
The past 3 weeks have been a whirlwind for many, if not all optometrists. On March 19, 2020, Congress extended a lifeline to small business owners in the form of a stimulus package called the CARES Act.
Aimed at keeping businesses and employees afloat through grants, forgivable loans and an expansion of unemployment benefits the CARES Act set foot with high hopes. However, guidance has been limited and the stipulations continue to change daily. Adding to the frustration, loan amounts continue to decrease while payouts continue to be delayed.
We have seen stressful concerns and jubilant successes on the ODsonFinance Facebook page, as it has become the prime outlet for frustrated and confused optometrists to share their CARES Act stories. We encourage you to continue the dialogue and read these quick updates on the 5 major Coronavirus programs:
Pandemic Unemployment Program
The Pandemic Unemployment Assistance (PUA) program extends unemployment not only to the W2 employees but also to business owners, self-employed and independent contractors.
- Individuals will be eligible for up to 39 weeks of benefits, starting with weeks of unemployment beginning February 2, 2020, through the week ending December 31, 2020.
- There will be an additional $600/week payment for up to 4 months on top of the regular UI benefits. Only the weeks of a claim between March 29 and July 31 are eligible for the extra $600 payments. This will be automatically applied to your claim.
- Individuals who have had their hours reduced are also eligible for “partial unemployment” per their state’s guidelines.
- Some optometrists have reported already receiving their $600/week payment. Many have not.
- If you haven’t, be patient, the $600/week will be backdated to March 29.
- California's EDD has recently released news that they will begin depositing the $600/week payment as early as Sunday April 12th.
- Individuals on UI are able to apply for PPP and EEIG in the interim.
- 1099/self employed individuals have faced difficulties applying for their UI claim and have been assured that their state's EDD system will update soon to allow proper claim submission.
"There will be an additional $600/week payment for up to 4 months on top of the regular UI benefits. Only the weeks of a claim between March 29 and July 31 are eligible for the extra $600 payments. This will be automatically applied to your claim. Individuals who have had their hours reduced are also eligible for “partial unemployment” per their state’s guidelines. If you haven’t, be patient, the $600/week will be backdated to March 29"
Economic Injury Disaster Loan (EIDL)/Emergency Economic Injury Grant (EEIG)
The $10,000 grant was the buzz on ODsonFinance last week, when everyone scrambled onto the Sba.gov website to try to get a piece of the $10 Billion pie, until it became apparent that somethings may be too good to be true.
- On April 6, the SBA made a decision to scale down their $10,000 advance and capped the maximum amount to $1,000 per employee as opposed to the $10,000 stated initially. It is unclear what amount will be granted to applicants who have zero employees.
- In addition, the SBA will make initial loan disbursements for two months of working capital up to a maximum of $15,000 per applicant (reduced from the initial 2 million per applicant).
- The SBA initially ambitiously claimed that the “grant'' would be made available “within three days” of a successful application. So far, not one member of ODsOnFinance has successfully received the EEIG grant from the SBA, and it has been at least 7 days since application has launched.
- For further perspective, the popular Reddit subreddit r/SmallBusiness with nearly 300,000 members has reported just a couple individuals actually receiving the grant (the subreddit is inclusive to any small business owner)
- The EEIG grant can be used for essentially any business purposes, besides capital improvements. Think: payroll, purchasing materials, rent and repaying debts/obligations.
- Lastly, no one truly knows if the EEIG grant can be additive to the PPP loan that they will be receiving.
"On April 6, the SBA made a decision to scale down their $10,000 advance and capped the maximum amount to $1,000 per employee as opposed to the $10,000 stated initially. It is unclear what amount will be granted to applicants who have zero employees"
Payment Protection Program (PPP)
So far, the PPP has been the talk of the week, as applications opened for business owners on April 3rd and self employed/1099 IC individuals on April 10th. Overwhelming demands have forced many banks, including Stern’s Bank and Wells Fargo, to halt accepting new applications. Since its inception, the program’s terms, along with its eligibility requirements have changed several times, causing massive confusion.
- The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities - however at least 75% of the forgiven amount must have been used for payroll.
- Loan payments will also be deferred for six months, and amounts not forgiven will be subject to 1% interest rate at a 2 year term (initially at 4% with a 10 year term).
- 100% forgiveness is applied when the employer hires back all employees, and maintains at least 75% of their wages in 2019 prior to 6/30/2020.
- If the employer is unable to hire back 100% of their workforce, the forgiven amount will be reduced proportionally to the number of employees hired back.
- The Treasury states that the loan must be disbursed/funded to the borrower within 10 days of loan application. Borrowers will risk losing their loan if they decide to hold off on funding.
- Once the funds have been disbursed, the borrower must utilize the funds for the next 8 weeks to pay for eligible expenses in order for the loan to be forgiven. There is no clear direction as to when or how soon to use the funds during the 8 week window.
- Currently, a handful of applicants have had success with their PPP loans being approved.
- There is still confusion as to when to rehire staff and how to utilize the PPP loans during the 8 week covered period, especially when the state is still on “stay at home” order.
"The PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities - however at least 75% of the forgiven amount must have been used for payroll. Loan payments will also be deferred for six months, and amounts not forgiven will be subject to 1% interest rate at a 2 year term (initially at 4% with a 10 year term)"
Relief Payments to Medicare Providers
As part of the CARES Act, the Department of Health and Human Services (HHS) is distributing $30 billion of the relief funds immediately to hospitals and healthcare providers, including optometrists. These are not loans, and will not need to be repaid.
- Practices who have received Medicare fee-for-service (FFS) reimbursements in 2019 will automatically qualify. Payment will be made within 2 weeks via ACH, with “HHSPAYMENT” as the payment description.
- All relief payments are made to provider billing organizations based on their Taxpayer Identification Numbers (TINs).
- A provider can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments they received by $484,000,000,000, and multiply that ratio by $30,000,000,000.
- Within 30 days of receiving the payment, providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment.
- Providers must agree not to seek collection of out-of-pocket payments from a COVID-19 patient that are greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network provider.
- Many doctors have received their funds as early as Friday, April 10th. If you have not received an email nor funds, remain patient as the payments are continued to be rolled out within the next 2 weeks.
- On April 27th, Medicare Providers can apply for additional funds through this program. Please visit here to fill out your information to be eligible for more relief payments: Application Portal
"Department of Health and Human Services (HHS) is distributing $30 billion of the relief funds immediately to hospitals and Medicare healthcare providers, including optometrists. These are not loans, and will not need to be repaid"
SBA Debt Relief Program
I saved the simplest and best for last - if you have an existing SBA (non-disaster) loan or will be obtaining a new (non-disaster) SBA loan, this relief program is instant money back in your pocket. Just as the name implies - the SBA Debt Relief program will provide immediate relief to small businesses by waiving their monthly SBA loan payments.
- The SBA will pay the principal and interest of CURRENT 7(a) loans for a period of 6 months.
- The SBA will also pay the principal and interest of NEW 7(a) loans issued prior to September 27, 2020 for a period of 6 months.
- Some optometrists are reporting that their lenders have reached out and informed them that their SBA payments have been automatically waived for the next 6 months. To many borrowers, this can be a large sum of money forgiven.
- While other lenders have not made that announcement just yet as they are waiting for guidance from the SBA.
- Contact your lender to see how they are handling this program.
- Note: This is not to be confused with the EIDL/EEIG
"The SBA Debt Relief program will provide immediate relief to small businesses by waiving their monthly SBA loan payments. They will pay the principal and interest of CURRENT 7(a) loans for a period of 6 months, also pay for principal and interest of NEW 7(a) loans issued prior to September 27, 2020 for a period of 6 months as well."
It is apparent that the SBA, SBA lenders and our state unemployment system are overwhelmed with requests as well as frustrated from little guidance from the government. We advise that you continue to stay up to date, follow along the discussion on ODsOnFinance on Facebook and follow our IG at @ODsonFinance and be in the forefront of information, as it is changing by the day, if not by the hour.
If you have any updates on the above programs, do not hesitate to let us know on our social media platforms or by direct message.
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