Everything Physicians Need to Know about the Paycheck Protection Program Forgiveness

The last few months have been very tough on the careers of physicians. Specifically for the practice owners, juggling between staff and patient management and keeping their finances in check has become a challenging ordeal.

Paycheck Protection Program PPP

The Paycheck Protection Program (PPP) by SBA has provided the much-needed stability required by physicians to support their staff during such trying times. If you have recently received a PPP loan, you need to be aware of the provisions provided by the PPP Flexibility Act that has brought upon the following key changes.

  • The expenses under non-payroll that can be forgiven have now been changed to 40% from 24%.
  • PPP loan takers can now use their funds for up to 24 weeks. However, if you have taken the loan before 5th June, you can opt for the earlier 8-week window to use the funds. Any loan borrowed after 5th June needs to be used within 24 weeks.
  • No payments will need to be made on the unforgiven part of the PPP loan until a final decision is passed by SBA on the loan forgiveness application. However, payments will commence post 10 months if such an application has not been filed.
  • Any part of the PPP loan that has not been forgiven needs to be repaid over a five-year period. However, this term needs to be agreed upon by both the lender and the borrower if the loan is taken before 5th June.

When it comes to PPP loan forgiveness, here are a few facts that the physicians need to know about.

1. PPP loan has been designed to cover all costs related to payroll

The payroll costs covered by PPP include:

· Employee salary, cash tips, commissions, etc.

· Payment for parental, vacation, and medical needs.

· Payment for insurance premiums.

· Retirement benefits payment.

· Tax assessed compensation payment.

· Sole proprietor income of up to $100,000/year.

2. You can get PPP loan forgiveness of up to 100%

If you follow a few specific criteria and have proof that the loan amount was spent accordingly, your entire PPP loan can be forgiven. For this, ensure that you use the funds only for the approved purposes. You also need to make sure that the entire loan amount is spent in the given time frame. Any part of the loan that remains unused will turn into the part of the balance that you would be liable to repay.

3. For PPP loan forgiveness, proof of expenditures need to be submitted

You need to use only the SBA-approved EZ application for filing loan forgiveness. This can be used by any borrower who did not reduce the total number of employees and their pays by more than 25%. For ensuring that you get maximum loan forgiveness, you need to meticulously maintain all the details of your PPP loan amount spending.

4. PPP loan forgiveness can be applied through your lender

Within 60 days your application will get reviewed and the decision regarding your loan forgiveness would be finalized. After that, your lender would submit it to SBA, where it would take another 90 days for the decision to be finalized and the funds to be remitted to the lender. Once done, your lender will notify you about the decision.

Eligibility for Employee Retention Tax Credit And PPP

For PPP loans, the covered period was extended through 31st March 2021. This applies to even the loans made on or before the enactment date, including such a loan’s forgiveness. You could apply for PPP1 and PPP2 loans until 31st March 2021 via an SBA-approved lender or any other depository institution or credit union that has been insured federally. The amount of funds available for PPP1 loans is $10 million and that for PPP2 loans is $2 million.

If you have not received a PPP loan before 8th August 2020, you can avail PPP1 (First Draw) loans. To be eligible for PPP1 loans, the borrowing entities need to be,

·       Small with fewer than 500 employees including veterans’ organizations, non-profits, self-employed individuals, tribal concerns, independent contractors, and sole proprietorships.

·       If more than 500 employees, the industries need to meet the alternative standards detailed by SBA for those specific industries.

If you have previously received a PPP1 loan, you would be eligible for PP2 loans if the Federal Government authorized uses.

· Have fewer than 300 employees.

· Has the ability to demonstrate a reduction of 25% in gross receipts between 2019 and 2020 quarters.

Although every salaried employee, including the highly paid physicians, are eligible for loan forgiveness, there are a few limitations. The new law puts a cap on salaries that are equivalent to $100,000. This is applicable when calculating the loan amount as well as the forgiveness amount.

Ways to Maximize the PPP Loan Forgiveness Amount

Here are a few tips to maximize the PPP loan forgiveness amount.

·       For both 8 as well as 24 weeks payroll and reference period, the records need to be maintained meticulously.

·       To maximize the loan forgiveness amount, you need to read and understand the issued regulations in this regard completely.

·       Get help from financial advisors when you need it. If you already have an accountant or financial advisor in place, you are good to go. If not, approach an expert at the earliest for your benefit.

·       Although it may look like filing an IRS form, it is way more complicated than that and requires thorough understanding. The application form includes Schedule A along with a worksheet. A lot of math and technicalities are involved in this that makes it a complex process.

As a physician, if you wish to safeguard your staff in such uncertain times, PPP loan forgiveness is a crucial step. To get maximum loan forgiveness, physicians must maintain the expenditure records correctly, spend the funds wisely, and apply for loan forgiveness in the right way. For more information, please visit www.taxgoddess.com, to schedule an appointment with our team.


This article was provided by Shauna A. Wekherlien, CPA, MTax, CTC, CTS is the owner of Tax Goddess Business Services, PC. She is a Certified Public Accountant (AZ), has her Master’s Degree in Taxation from Arizona State University, and is one of the elite Certified Tax Coaches in the USA (1 of just 5 in Arizona). As a Certified Tax Coach, Shauna A. Wekherlien, CPA is trained to lower your taxes to the bare legal minimum and is in the top 1% of Tax Strategists in the country. Her firm services clients across the entire USA! She is an author, speaker, investor, and a highly sought-after tax strategist whose reputation has been built on 16+ years of experience and implementing innovative tax solutions for individuals and businesses. To learn more about Shauna and her team, visit www.taxgoddess.com.
*Just so you have an idea: according to Google there are 660,000 CPAs across the entire USA. Of those 60,000 have their Masters in Tax (meaning they specialize in taxation). Of those there are only 607 Certified Tax Coaches (CTC), and of those only 15 Certified Tax Strategists (CTS). Tax Goddess is ranked, by the AICTC, in the top 3 of all of those professionals for tax strategy (approx in the top .0005% of all of those CPAs across the USA).

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