Since our Friday Bulletin, there has been further guidance issued which we want to update you regarding the CARES Act Paycheck Protection Program loan (PPP loans). This continues to be a somewhat fluid situation as agencies, lenders, and individuals are attempting to apply the guidelines spelled out in the CARES Act legislation so it is possible that further changes and guidance may be announced by Treasury, SBA, and lenders which could further affect the PPP loan process.

Independent Contractor (IC) Pay Exclusion – Revisions have been issued stating that 1099 independent contractor compensation is NOT to be included in the calculated PPP loan request by the party who pays those individuals. ONLY employees or the self-employed owners are to be included. Anyone who may have compiled their PPP loan request data last week should revisit that data and eliminate any 1099 related costs that were included.

$100,000 Cap on Annual Compensation – The $100,000 cap on annual “compensation” per employee INCLUDES retirement plan & health benefits PAID on behalf of that employee and state & local payroll taxes (generally state unemployment taxes) paid on that employee’s compensation. Anyone who may have compiled their PPP loan request data last week should revisit that data and eliminate benefits and taxes so that the total compensation amount for any employee does NOT exceed $100,000 INCLUDING all of these costs.

ADA Cautionary Memo – We understand that the ADA issued a cautionary memo over the weekend suggesting that anyone who applied for any portion of the EIDL loan and who had NOT received those loan proceeds prior to April 3rd may be considered “ineligible” to apply for the PPP loan. We have not found anything in the CARES act that supports that position and other dental advisors have put out their own memo’s suggesting that the ADA’s memo was incorrect and should be ignored on that point. 

PPP Loan Funding Delay – We understand some lenders will allow a delay in the funding of the loan proceeds after they’ve approved the loan. Timing the funding of a PPP loan with your back-to-work timeline is a good strategy in many cases. You should check with your advisor team regarding your particular situation. We also recommend you check with your lender regarding their policy and procedures on delayed funding in case there are any discrepancies in various lender policies concerning whether a funding delay will be available.

In the meantime, let us know if you have any questions.

Stay safe!