Home Health & Hospice Week

Keep loan documentation for 6 years, the Small Business Administration instructs.

Now that the feds have issued an application for CARES Act PPP loan forgiveness, should you use it right away?

Reminder: Forgiveness of CARES Act Pay-check Protection Program loans “is based on the employer maintaining or quickly rehiring employees and maintaining salary levels,” the Department of the Treasury explains in a program overview.“Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

A new loan forgiveness application details just how lenders will calculate businesses’ forgiveness levels (see Eli’s HCW, Vol. XXIX, No. 19).The application and accompanying instructions detail that even if businesses had to reduce employees at first, they will fit into a forgiveness “safe harbor” if they reduced FTE employee levels in the period beginning Feb.15 and ending April 26, but then restored FTE employee levels by June 30. For full forgiveness, the FTE employee levels must be restored to the levels in effect Feb.15.

On one hand: If you meet the requirements, applying for loan forgiveness immediately will take that uncertainty off your budget and accounting plate that much faster.

Generally, “most home health providers will want to get it done quickly,” observes Brian Todd with BKD in Springfield, Missouri.“With many health care providers, the salary costs are such a large percentage of the eligible costs that there might be a little less uncertainty and they are anxious to get the forgiveness completed.”

But on the other hand: If you are not yet back up to pre-pandemic employment levels, you still have a month to get there and qualify for full PPP loan forgiveness.

“I am advising clients to wait in filing the loan forgiveness application ...until it has been either eight weeks (56 days) from the date their loan was funded or until June 30,” says Sandy McCleve with Advantage Healthcare Consulting Cost Report & Reimbursement in North Salt Lake, Utah.

Why? “The recipient of the PPP loan funds will be best served by waiting and being able to provide documentation that the PPP loan funds were used for payroll or the 25 percent for rent, mortgage interest, or utilities,” McCleve advises.“Those who decide to file the forgiveness application earlier stand a greater chance of being rejected.”

Under this program, there’s no such thing as advance forgiveness, maintains finance expert Dave Macke with VonLehman & Co. “Forgiveness is based on actual eligible expenses,” Macke says.

Keep An Eye Out

Plus, more definitive guidance might be ahead.“If there are any remaining gray areas that providers are concerned might impact their forgiveness, then that could also be a reason to wait,” Todd adds.“Forms and instructions generally aren’t authoritative, so more formal guidance that is forthcoming could change or clarify some of the remaining gray areas.”

And your lender may not be taking for­giveness applications yet anyway.“Many of the lenders may be waiting on this guidance before pro­cessing forgiveness applications,” Todd tells Eli.

SBA has not yet announced if there’s a forgiveness application deadline.

Whether you apply sooner or later, “PPP loan borrowers should immediately organize documen­tation and implement procedures in accordance with the Loan Forgiveness Application,” urges law firm Holland & Knight in online analysis.

Tip: “The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request,” the new form specifies.