COVID-19 Federal Laws and Financial Options for Optometry
Experts address questions regarding COVID-19 federal crisis relief, including details on the CARES Act, 7(a) loans, updated rules for the Families First Act and more.
Jeff Michaels, O.D.
April 8, 2020
Frequently asked questions from the webinar
- I need help finding a lender. None of the banks I've contacted can help me.
The AOA has some resources for identifying lenders. Additionally, the Treasury Department is authorizing additional lenders to provide these loans.
- I'm an independent contractor, so can I apply for a Paycheck Protection Program (PPP) loan?
Yes, starting on April 10 you can apply.
- Can I choose the 8 weeks that I want the loan to be used?
The Small Business Administration (SBA) indicates "The eight-week period begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The lender must make the first disbursement of the loan no later than ten calendar days from the date of loan approval." Based on this guidance, we don't believe that you are able to set the origination date unless your bank is giving you that option.
- Should I hire all my staff back now if I apply for the loan?
With regard to rehiring staff, the only information we have from the SBA so far indicates: "You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between Feb. 15, 2020 and April 26, 2020." We are waiting for more guidance from SBA on loan forgiveness and how full-time equivalent will be assessed.
- What if I have to let go of some of my staff after I used the PPP loan for 8 weeks?
The SBA has not indicated they will look at staffing levels following June 30.
- What if my office has reduced hours for the 8 weeks of the PPP loan?
You are still eligible to apply for the loan.
- I understand that I need to use at least 75% of my PPP loan on payroll. Does that mean I should pay my staff at the 75% level?
No, the 75% threshold does not indicate you should pay your staff at 75% of their typical salary. The actual amount of your loan forgiveness will depend on how you spend the money. The SBA has indicated that for your loan to be forgiven, they will require that not more than 25% of the loan forgiveness amount may be used for non-payroll costs. Additional guidance on loan forgiveness will be coming from the SBA soon.
Updates since the webinar: PPP, paid sick leave and eFMLA
Funding for the PPP
The SBA announced on April 16 that it had exhausted the initial $350 billion Congress had appropriated for PPP. The AOA is working with Congress to pass additional legislation that would provide new funding for this much-needed relief. Doctors unable to access PPP relief due to these funds being exhausted and willing to contact their lawmakers as an advocate should contact AOA advocacy staff.
Including owner salaries on PPP applications
The SBA on April 14 confirmed the accuracy of the AOA's guidance for sole proprietors to include their own salaries in applications for the PPP. The SBA noted: "The self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application." Some lenders had previously inappropriately instructed owners not to include their own salaries in applications.
Tax credits, paid sick and eFMLA leave
As an update to the webinar, we have confirmed that you do not need to block taxes in anticipation of leave. Your payroll company will take directly from Employer FICA (against all employees, even those not taking leave) and if that is not enough, then they'll take from Employee FICA and Employee Federal. Any excess will be applied to offset any remaining tax liability on the Form 941, Employer's Quarterly Federal Tax Return, and the amount of any remaining excess will be reflected as an overpayment on the Form 941. Like other overpayments of federal taxes, the overpayment will be subject to offset prior to being refunded to the employer.
IRS documentation for tax credits related to paid sick and eFMLA leave
The IRS has clarified that to document eligibility for the sick leave or family leave credits employers should document the following:
- The employee's name.
- The date or dates for which leave is requested.
- A statement of the COVID-19-related reason the employee is requesting leave and written support for such reason.
- A statement that the employee is unable to work, including by means of telework, for such reason.
Documenting cases due to quarantine
The IRS has indicated that the statement from the employee should include the name of the governmental entity ordering quarantine or the name of the health care professional advising self-quarantine, and if the person subject to quarantine or advised to self-quarantine is not the employee, that person's name and relation to the employee.
Tax credit documentation for employee leave to care for children and children age 14-17
As for all cases when an employee is requesting leave to care for a child because of a school or day care closing, the name of the school that has closed or day care that is unavailable should be documented.
Also, information should be collected indicating that no other person will be providing care for the child during the period for which the employee is receiving family medical leave.
If an employee is taking leave to care for a child 14-17 years old during daylight hours, a statement that special circumstances exist requiring the employee to provide care.
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