Financial anxiety is very much a part of the COVID-19 pandemic. Established business routines have changed dramatically, impacting revenue and costs. The government has responded with the CARES Act, but can it help your pharmacy?
If you need money to cover payroll, more time to pay small business debts, or an emergency loan, the answer may be yes.
Paycheck Protection Program (PPP)
We’ve heard a lot about personal protective equipment (PPE) during the pandemic, and this payroll loan program from the U.S. Small Business Administration (SBA) is equally about protecting your workforce. June 30th is the deadline to apply for a loan specifically designed to keep your employees paid. Even better, if you maintain your payroll for 8 weeks, the loans are forgiven – basically making them grants. You can only apply for one of these, and they can’t be used for salaries over a certain amount.
PPP can be used to rehire people (if you do it quickly) and for payroll costs like time off, insurance, retirement, and state and local taxes. You can also use it for rent or mortgage payments and utilities. No collateral or personal guarantees are required and no fees are charged. Any amount not forgiven is on a 2-year, 1% interest term.
Small Business Debt Relief Program
This one is about as easy as it comes. If you have an SBA loan – especially 7(a), 504, and microloans – the CARES Act made provisions for the SBA to automatically cover 6 months of payments, including for new borrowers who take out an eligible loan by September 27. But note that this option may be affected by applications for other financial assistance, such as a PPP loan (discussed above) or for relief of an emergency loan (see below).
Economic Injury Disaster Loan (EIDL) Emergency Advance
If you need money to meet business needs that you could have paid for before COVID-19 struck, you can apply for a low-interest disaster loan, a program that pre-existed the current crisis. But in response to the pandemic, you can now request a special $10,000 advance to be disbursed within a few days, with no repayment required. This program is available through December 31, 2020.
Be aware that while these various relief options have some generous provisions, there may be rules and implications for how they interact. For example, it’s possible that money from two aid sources cannot be used for the same expenses, etc.
Of course, pharmacy owners should consult their own accountants and other advisors for guidance tailored to their situations. The CARES Act allocated additional funding to Small Business Development Centers and the SCORE network to help provide counseling and training to loan applicants, so consider reaching out.
You’ll also want to check out our latest QCompass podcast. An expert from the NCPA® talks about financial opportunities for pharmacists from the CARES Act and the importance of not leaving money on the table during this crisis. Check it out here.
Please note that the SBA announced today that it is unable to accept new applications at this time for some of these programs. Congress is currently debating additional appropriations.