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CARES Act Overview

CARES Act Overview

Federal Government CARES Act Financing - NOW AVAILABLE

Important Information Regarding the Paycheck Protection Program (PPP2)

As of March 25th, 2021, Congress passed the "PPP Extension Act of 2021." This bill extends the date businesses can apply for Paycheck Protection Program (PPP2) Loans by two months, until May 31, 2021, as well as provides the SBA an additional 30 days to process loans.

For more information about the SBA's current relief efforts and details on these programs, please visit the SBA's website on coronavirus relief here.

Important Details Regarding the American Rescue Plan Act

On March 11th, 2021, the President signed a new $1.9 trillion COVID-19 relief stimulus package into law. This American Rescue Plan Act of 2021 (ARP) includes additional funding for small businesses including programs such as the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) that the SBA is currently administering.

Additional ARP funding includes:

  • $7.25 billion additional funding for the Paycheck Protection Program (PPP)
  • $15 billion additional funding for the Economic Injury Disaster Loan (EIDL)

For more information about the SBA's current relief efforts and details on these programs, please visit the SBA's website on coronavirus relief here.

Deadline to apply for "PPP2" loans

The application window for second-round Paycheck Protection Program (PPP2) loans has been extended. The deadline to apply for a "PPP2" loan is May 31, 2021, or until funds are depleted. For more information about the Paycheck Protection Program, please visit the SBA's website here.

Important Details Included in the New COVID-19 Economic Relief Act

Paycheck Protection Act

On December 27th, 2020, the President signed a new $900 Billion COVID-19 relief stimulus package into law. This package includes substantial funding for small business through the Paycheck Protection Program (PPP).

Paycheck Protection Program (PPP)

  • $284 Billion in first and second forgivable PPP Loans.
  • PPP borrowers may receive a loan amount of up to $2 million or 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year.
  • Funding is available to:
    • First-time qualified borrowers:
      • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
      • Sole proprietors, independent contractors, and eligible self-employed individuals.
    • Businesses that previously received a PPP loan (may apply for another loan of up to $2 million):
      • Have 300 or fewer employees.
      • Have used or will use the full amount of their first PPP loan.
      • Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
  • The costs eligible for loan forgiveness include payroll, rent, covered mortgage interest, and utilities as well as the following:
    • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
    • Expenditures to suppliers that are essential at the time of purchase to the recipient's current operations.
    • Covered operating costs such as software and cloud computing services and accounting needs.
  • To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks—the same parameters PPP1 had when it stopped accepting applications in August.

As of 12/27/20, the legislation includes the following important information surrounding PPP and Tax Deductions:

  • Forgiven PPP loans are not considered taxable income.
  • Business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted.
  • The COVID-19 relief bill clarifies that "no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided.”
  • This provision applies to loans under both the original PPP and subsequent PPP loans.
  • Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.

The new COVID-19 relief bill also:

  • Clarifies that group health plan expenses are considered wages.
  • Clarifies that employers who receive PPP loans may qualify.
  • 100% meals expensing for 2021 and 2022.
  • Unused dependent care and FSA can be carried through end of 2021.
  • Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount.
  • The SBA must create the simplified application form within 24 days of the bill's enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements.
  • Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
  • Includes set-asides to support first- and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders.

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What is the Federal CARES Act?

A $2.2 trillion legislation package that was signed by President Trump on March 27, 2020 to provide needed support for health care resources to fight COVID-19 and prevent severe US economic downturn. Practice owners can now apply for government guaranteed loans, some of which will be forgiven.

The CARES Act also allocated $349 billion to the Small Business Administration to guarantee loans to small businesses, including Dental and Medical practices, that have been impacted by the coronavirus pandemic. There are also provisions to help small businesses keep workers employed during the economic downturn. Known as the Paycheck Protection Program (PPP), the initiative provides 100% federally guaranteed loans to small businesses. An additional $310 billion was added to this program on April 23, 2020. The CARES Act includes an infusion of $175 billion to the Public Health and Social Services Emergency Fund (the "Provider Relief Fund") to directly cover costs of hospitals, health systems, and other providers related to COVID-19.

Key Provisions That You Should Know and Consider

Updated as of March 26, 2021

Dental and Medical Practices

+ SBA Paycheck Protection Program (PPP)

+ HHS Provider Relief Fund

+ Deferred Social Security Taxes

+ Employee Retention Credit

COVID-19 & Dentistry

Webinar

What Dentists Need to Know About the New COVID-19 Economic Relief Bill Watch video »

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Stifel

How Key Provisions of the Act Affect Major Stakeholders:

Small Business

Small Business

  • Access to emergency small business loans
  • Tax Relief
  • Existing SBA loan relief
Dental

Dental and Medical

  • Fund for Health care providers for COVID-19 treatment and losses
  • Flexibility for telehealth
  • Insurance coverage for testing and vaccines
Individuals

Individuals

  • Individual payments
  • Enhanced unemployment insurance
  • Tax filing/payment delays
  • Retirement plan withdrawal changes
  • Student loan relief

Helpful links

*The information contained herein is intended to be informative in nature, and is not intended to be a substitute for professional advice. The information was obtained from sources we believe to be reliable, but is not guaranteed. This situation is dynamic and continuing to change daily. Henry Schein does not undertake any obligation to update or revise any statements contained herein, or correct inaccuracies whether as a result of new information, future events, or otherwise. Dental and Medical professionals must make their own business decisions and may wish to seek professional advice before acting with regard to the subjects mentioned herein. Nothing contained herein should be treated as legal, business, accounting, international, insurance, tax, financial or other professional advice.

The information contained herein is changing continuously and the following website should be accessed for real time updates:
https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

This site will be updated as new information becomes available.

Last Updated on March 26, 2021