Medical Billing Solutions

The PPP is a federal loan program that helps small- and medium-sized businesses impacted by the coronavirus (COVID-19) to retain their workforce. The loan is an SBA 7(a) loan with the following terms:

• 1.00% fixed interest rate.
• Deferred payments for 6 months.
• Repaid over a 2-year term.
• Up to 100% of the principal and accrued interest may be forgiven after 8 weeks.

The Paycheck Protection Program was signed into law in the wake of the COVID-19 global health crisis. One of this program’s significant features is that you can apply for loan forgiveness after receiving the funds. Forgiveness can be up to 100% of the loan and accrued interest. Another unique feature is the loan deferment, meaning you won’t have to pay principal and interest on your loan for the first 6 months.

This loan will be packaged as an SBA 7(a) loan program. Businesses can apply through a FDIC approved SBA lender (or another qualified SBA lender). SBA and most banks application fees will be waived for all borrowers. Lenders will have delegated authority to make and approve loans without requiring SBA review or approval – this streamlined process is designed to get capital in the hands of businesses quickly. If you are a current FDIC approved banking customer, your Business Banker or Relationship Manager can show you how to apply.

Small- and medium-sized businesses that were in operation on or before February 15, 2020 with 500 or fewer full- or part-time employees (independent contractors can apply on their own and do not count towards the employee count), are generally eligible to apply for this loan. Additionally, the business must have paid salaries and payroll taxes or paid independent contractors (as reported on Form 1099-MISC).
Businesses can also qualify by meeting the SBA’s NAICS-based size test, which is based on the number of employees relative to an industry size threshold. Details on SBA size standards can be found (External) here.

Calculate your maximum loan amount by taking your business’s average monthly payroll over the prior 12 months and multiplying it by 2.5. Your monthly payroll includes wages, tips, group health, retirement benefits and employer-paid taxes, but excludes the amount of compensation to individuals in excess of $100,000. The maximum loan amount is the lesser of that value, or $10,000,000.

Seasonal businesses and businesses not in operation from February 15, 2019 to June 30, 2019 are subject to a different measurement period for purposes of determining average monthly payroll.

In order to submit your application online, you will need to print application materials, sign, scan, and upload documents. As of today, most SBA lenders/bank has created application portal on their online platform.

Based on current guidance, you should gather the following documents to apply for a Paycheck Protection Program loan:

1. 2019 IRS Quarterly 940, 941 or 944 payroll tax reports.
2. Payroll reports for a twelve-month period (ending on your most recent payroll date), which will show the following information:
   • Gross wages for each employee, including officer(s) if paid W-2 wages.
   • Paid time off for each employee
   • Vacation pay for each employee
   • Family medical leave pay for each employee
   • State and local taxes assessed on an employee’s compensation
3. 1099s for independent contractors for 2019.
4. Documentation showing total of all health insurance premiums paid by the company owner(s) under a group health plan.
   • Include all employees and the company owners.
5. Document the sum of all retirement plan funding that was paid by the company owner(s) (does not include funding that came from the employees out of their paycheck deferrals).
   • Include all employees, including company owners.
   • Include 401K plans, Simple IRA, SEP IRAs.

No. The Paycheck Protection Program does not require collateral or a personal guarantee.

Timing is dependent on your accurate completion and submission of information to your bank and volume of requests. Once your bank approves your loan, the SBA registers it and an executed promissory note is delivered to your bank, funds can be disbursed as fast as possible by wire transfer or ACH payment directly into your business checking account.
Approved uses of proceeds include:

• Payroll costs (at least 75% of all loan proceeds must be used for payroll costs)
• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
• mortgage interest payments (but not mortgage prepayments or principal payments)
• rent payments
• utility payments
• interest payments on any other debt obligations that were incurred before February 15, 2020; and/or
• refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020

The interest rate for Paycheck Protection Program loans is set by the SBA and is 1.00%.

The program is administered by SBA lenders and loans may be originated through June 30, 2020 contingent upon the availability of program funds.

There may be more applicants and requests for loans than available funds from the SBA. If that occurs, not every qualified applicant will receive loan proceeds under the Paycheck Protection Program.

The Paycheck Protection Program loan will not affect your future SBA loan funding or total dollars allowed from the SBA.

Up to 100% of the principal amount and any accrued interest of the loan may be forgiven if you use the proceeds on qualifying expenses. However, there are certain actions that may reduce the amount of forgiveness, such as reducing the number of employees or reducing employee salaries or wages. Only up to 25% of the forgiven loan amount can be for non-payroll costs.

Any amount not forgiven will have an interest rate of 1.00% fixed for a period of 2 years. Payments will be deferred for 6 months following origination.

Yes, customers can use the Paycheck Protection Program loan proceeds to pay existing bank interest. However, any amount applied to non-mortgage debt or principal payments will not qualify for loan forgiveness.

You can contact us at Harava Group, Inc. at 240-425-7465 or via email at jay@haravagroup.com. If you are a current commercial bank customer, reach out to your Business Banker or Relationship Manager. You can also read up on SBA website.

No. The Government limits each eligible borrower to only one PPP loan. This means that if you apply for a PPP loan you should consider applying for the maximum amount that you are eligible to receive.

Yes, you can apply for both, but you may only receive proceeds from one loan to use for eligible payroll and related expenses. Additionally, if you’ve taken an SBA EIDL loan between January 31, 2020 and April 3, 2020 and used proceeds from an SBA EIDL to pay payroll and related expenses, you must refinance that EIDL loan with a Paycheck Protection Program loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
It’s critical for you to weigh all options available to you to ensure the best financial decision for your business. To apply for an EIDL, you must apply directly through the Small Business Administration. More information on the EIDL can be found on SBA website here.

(External) SBA COVID-19 Disaster Assistance