Wealth Matters for Physicians

Article5 Things Physicians Need to Know about PPP Loan Forgiveness



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By Ryan Graham, CFA, CFP®, Senior Financial Advisor

On May 15, the Small Business Administration (SBA) finally released what many physicians who own a practice had been waiting for: an application and instructions for how Paycheck Protection Program (PPP) loan forgiveness will actually work. The long-awaited guidance provides some clarity but still leaves many unknowns. We can expect more from the SBA, and possibly even changes to the program by Congress that may benefit you. We’ve summarized some key considerations here.

1. The new “Alternative Payroll Covered Period” provides some additional flexibility and potential opportunity. The SBA originally stated that the eight-week forgiveness clock started the day the loan was disbursed to your bank account. Now, you may use an “alternative” period that begins on the first day of the first pay period following loan disbursement. Assuming you use a biweekly pay period (or one that’s more frequent), this lets you push back the start of your forgiveness clock. Note: Congress is considering extending this eight-week clock, which could give business owners like doctors even more flexibility.

2. The 75% payroll rule gets some more attention. While many members of Congress are calling for modification, for now it stands. The maximum forgiveness amount will be influenced by the actual amount spent on payroll, versus eligible business mortgage interest, rent and utilities.[1] If one received a $50,000 loan and only $15,000 is spent on payroll, then the maximum forgivable amount will be $20,000 (amount spent on payroll ÷75).

3. You have another “Schedule A” to get familiar with. We are not talking about the Schedule A on your Form 1040 tax return. The forgiveness application includes both a Schedule A and Schedule A worksheet to help you calculate the eligible forgiveness amount. Remember, the maximum amount per employee that can qualify for forgiveness is $15,385 (or $100,000 × 8/52 weeks). This is the highest amount that can be included for one employee in the Schedule A worksheet as well as the most that may be included for owner compensation on Line 9 of Schedule A. Meanwhile, contributions for employees (not practice owners) for group health coverage, retirement plans and payment of state and local taxes on compensation are includible separately, in the forgiveness calculation (Schedule A, Lines 6, 7 and 8).

4. Safe harbors provide ways to avoid reductions to your eligible forgiveness amount. An employer will experience a reduction in the amount eligible for forgiveness if employees were laid off (reduction in full-time equivalents) when patient visits dropped to emergencies only during stay-at-home orders, or if the total wages of employees are reduced by more than 25%. In general, safe harbor rules allow a physician who hires back staff by June 30 to qualify for full loan forgiveness.

5. Keeping good records is essential. It is a common best practice to keep organized records of receipts, statements, payroll records, etc. The forgiveness application provides details about what will be required along with it, so we recommend you review the required-documents list carefully before submitting.


Looking to discuss your PPP loan, or another financial concern? Schedule a complimentary consultation with an Altfest advisor.


Altfest is proud to be the preferred wealth manager for Medical Society of the State of New York (MSSNY) members. We specialize in providing personalized financial guidance for physicians and their families that goes beyond investments, offering education in key services for medical professionals, including creditor and asset protection, tax planning and debt management. Learn more at altfest.com/physicians.



Opinions expressed herein are solely those of Altfest Personal Wealth Management, unless otherwise specifically cited.  Material presented is believed to be from reliable sources, but not representations are made by our firm as to other parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

[1] Forbes


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