Solo veterinarians and multi-vet practices are trying to figure out how they fit into the $2-trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020.
The CARES Act is designed to encourage eligible employers to keep employees on their payrolls, despite experiencing economic hardship related to COVID-19, with an employee retention tax credit, among other measures. It also provides small business loans, expanded unemployment payments, and payments directly to individuals from the federal government based on adjusted income.
First, let’s delve into the business side of the CARES Act to understand what it is and how to determine if you qualify, and how to apply if you do qualify.
Payment Protection Program
EquiManagement spoke with Bryan Brendle, Director of Legislative Affairs for the American Horse Council, about the CARES Act and what it means to the veterinary industry.
First, he noted that veterinarians—whether as a small business or an individual practitioner—could be eligible for a portion of the $350 billion in CARES Act loans under the Paycheck Protection Program (PPP) of the Act. These funds were designed to help businesses in distress pay for rent, mortgage interest, utilities and payroll (including benefits).
The good news is that if those funds are used for payroll or the other specific expenses listed above that keep Americans working and companies in business, the loan turns into a grant, noted Brendle.
“If you already had to lay off an employee, you can reverse and rehire that person and qualify for the program,” said Brendle. But it has to happen quickly.
The two major ceilings of the Paycheck Protection Program are that you must have 500 or fewer employees, and it maxes out at $10 million per borrower.
Others that are included under the Paycheck Protection Program are 501(c)(3) non-profits, sole-proprietors, independent contractors and other self-employed individuals.
The Treasury department stated it this way: “The Paycheck Protection Program provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds can also be used to pay interest on mortgages, rent and utilities. Fully Forgiven Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders (banks) will charge small businesses any fees.
“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”
Apply for PPP Quickly
Brendle recommended that veterinarians apply quickly if they wish to take advantage of the Paycheck Protection Program.
The Treasury Department started on April 3 allowing small businesses and sole proprietorships to apply. Then starting on April 10, independent contractors and self-employed individuals will be able to apply.
The Treasury Department noted that, “We encourage you to apply as quickly as you can because there is a funding cap.”
According to CNBC, "As of Monday afternoon, the SBA had assigned 130,000 loan numbers with a value of more than $38 billion."
For more information, go to https://home.treasury.gov/ and click on the red bar at the top of the page that says “For small businesses seeking direct relief from COVID-19, CLICK HERE to learn more about Paycheck Protection Loans.”
On that landing page there are links to several items in the article on the page that are useful.
Brendle suggested on that page that you read the Paycheck Protection Program overview, read this fact sheet Information About the Borrower Application Form, download the actual Borrower Application form and perhaps read how lenders are working in this program.
When the Small Business Association (SBA) opened their small business and eligible non-profit loan process on April 3, Brendle said they processed about 13,000 applications on that first day.
Independent contractors and the self-employed can apply for the Paycheck Protection Program on April 10. Brendle recommended that veterinarians who fall under this category not wait until April 10 to start filling out forms and having conversations with their banks.
Lenders Are Your Second Step
While Brendle recommended that you download the three-page Borrower Application form and get started, you must go through an FDIC bank or Farm Credit System bank to actually apply to get the CARES Act loan/grant. Contact the bank that you normally do business with about the application process.
If you haven’t downloaded and filled out an application from the above link, the bank will have the application.
“If veterinarians already have relationships with a farm credit institution, I would recommend starting with them,” advised Brendle. “They are used to working with disaster loans and applications.”
Brendle also said if veterinarians can’t qualify for the Payment Protection Program at a bank, please let him know why not at firstname.lastname@example.org.
An existing program has been expanded, so if you are unable to qualify for the Payment Protection Program, you might be eligible for the Economic Injury Disaster Loan Program (EIDLP).
In the past, EIDLP was only available if you lived in a location where a state of disaster had been declared (flood, hurricane, fire, etc.). Now this program includes all of the United States, according to Brendle.
Unlike the Payment Protection Program, loans under the EIDLP do not convert to grants in the event the recipient meets criteria tied to the COVID-19 crisis.
Brendle said recipients can use the EIDLP loans “to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.” He noted that the Small Business Administration has set interest rates at 3.75 percent for small businesses and 2.75 percent for eligible non-profits.
The IRS is sending direct cash assistance in the form of Individual Recovery Rebates to those who are eligible. You do not have to fill out any applications for this benefit.
Each person with adjusted gross income up to $75,000 is eligible for a $1,200 cash rebate from the IRS. The amount rises to $2,400 for married couples, noted Brendle.
There also is a $500 credit for children to eligible persons.
Therefore, if you are an individual making $75,000 or less per year on your adjusted income reported to the IRS, you will receive a rebate of $1,200. Depending on how you interact with the IRS, noted Brendle, you will either have that directly deposited into your account or have a check mailed to you within the next 2-3 weeks from the Treasury Department.
Brendle noted that rebates are pro-rated based on your adjusted income up to the cap of $99,000 for individuals and $198,000 for married couples, according the IRS.
If you are now unemployed, furloughed or laid off full time or part time, the CARES Act also contains the Pandemic Unemployment Assistance bill.
The Pandemic Unemployment Assistance bill extends unemployment benefits to those who are self-employed, are independent contractors, individuals who have limited work history, and persons who are unable to work as a direct result of the pandemic.
Brendle said self-employed professionals—such as trainers and farriers—and independent contractors impacted by economic disruptions (including event cancellations caused by “social distancing”), should find this provision helpful.
The CARES Act also extends unemployment benefits for 13 weeks beyond the expiration of state benefits, usually set at 26 weeks, noted Brendle. The CARES Act also provides $600 per week of benefits on top of those provided by state programs.
Brendle said for more information related to state unemployment programs, go to CareerOneStop.org, scroll down, and in the search bar for FIND UNEMPLOYMENT BENEFITS select the name of your state.
While the new CARES Act might be a good source of assistance to get you through job loss or a decrease in business income during the COVID-19 pandemic, veterinarians still need to be acutely aware of their bottom lines. These loans, grants and payments will not make up for a lack of preparation and financial awareness on the part of individual veterinarians and veterinary practices.