Financial Advisor Encourages In-Home Care Providers to Pursue PPP Loans Ahead of Deadline

The deadline to get a Paycheck Protection Program (PPP) loan is just a few days away, with $130 billion still available to small businesses ahead of the June 30 final deadline.

But even with the cutoff around the corner, the Small Business Administration (SBA) continues to issue new guidance on the ever-evolving program. To date, PPP has seen more than 45 changes.

In the latest round, SBA clarified that recipients can apply for early loan forgiveness — but that it could cost them. On top of that, the administration simplified the process to apply for loan forgiveness.

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While more changes are likely to come, PPP as it looks today appears to be a safe bet for small businesses, including those in the home-based care space. As such, those providers who haven’t yet should consider applying for the program, according to Leon LaBrecque — a lawyer, accountant and chief growth officer at Sequoia Financial Group — who assuaged providers’ audit fears. 

“The Treasury seems to have inferred pretty much that they’re not going to audit anything under $2 million,” LaBrecque told Home Health Care News. “So if your [loan is] under $2 million, I think the audit risk is exceedingly low, especially if you bring in the documentation.”

So far, the SBA has approved almost 4.7 million loans for a total of $515 billion, with most of those borrowers falling in the less-than-$2-million range, according to LaBrecque. In other words, the vast majority of borrowers are safe from audit concerns, which have prompted many home-based care providers to shy away from the loans in the past.

On top of that, changes to the program only continue to make the loans look safer and more appealing to operators who might consider applying.

For example, earlier this month the PPP Flexibility Act of 2020 (PPPFA) was signed into law, extending the PPP application and loan forgiveness deadline, reducing the minimum amount of the loan that must go to payroll to 60% and instituting various other pro-borrower changes.

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Then, earlier this week, loan recipients got word that they could apply early for loan forgiveness, rather than waiting until the end of the year, providing peace of mind sooner rather than later that the loan will be forgiven.

“I think most of us [financial advisors] would say you should probably try to get your forgiveness earlier if you [can], rather than wait until Dec. 31,” LaBrecque said.

There is a caveat to the new guidance, however.

Recipients must not have cut their employees’ wages by more than 25%. Otherwise, borrowers can apply for and get early loan forgiveness — but they must pay back the difference of any additional wage cuts to employees.

For example, if a home care provider cut wages by 30%, it would have to pay 5% of that back to employees to get early loan forgiveness. The other option would be to wait until the end of the year to apply for loan forgiveness, giving the provider more time to hit the benchmark.

All things considered, LaBrecque encourages smaller agencies — especially those that are mom-and-pops — to apply for unclaimed PPP loans if they haven’t already.

“Those are exactly the people who are supposed to get PPP loans,” LaBrecque said. “That’s what it was intended for.”

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