Maximizing the portion of your PPP loan to be forgiven should be one of your goals.  Taking steps to ensure that the full amount of your loan is forgiven might be short-sighted. Too many clients seem singularly focused on doing whatever it takes for the full PPP to be forgiven.

For starters, the maximum portion of the PPP to be forgiven hinges on how many hours your staff work and how much your staff earns during the 8-week coverage period. Only by paying your staff does your salary, rent and utilities factor into the forgiveness calculation. What should you do if your office remains closed?

The only way to get the full amount of the PPP loan forgiven is to hire back all your staff and essentially pay them to not work until such time you reopen your practice.  How is that any different from having them stay on unemployment? By keeping your staff and yourself on unemployment, the government pays you and your staff each week not to work. If you rehire your staff before your office reopens, the government reimburses you to pay your staff their salaries, plus $1,923 per week for yourself, while no one works. Either way the government is paying while no one is working.

Yes, if your staff stays on unemployment, less of your PPP will be forgiven.  So what?  You didn’t spend that PPP money anyways so it should be available to repay the lender.

And sure, there are situations where you benefit by rehiring your staff as soon as possible.  If you haven’t personally collected unemployment, paying your staff is the only way for you to receive government subsidized payments of $1,923 per week for 8 weeks. Same goes for the government subsidizing your rent and utilities for 8 weeks too.

But there are also costs to figure in. When you rehire your staff, the government subsidizes the salaries paid to your staff. They don’t subsidize the 7.65% employer match of Social Security and Medicare taxes, unemployment taxes, and workers compensation insurance on that gross payroll. They also won’t replenish that PPP money if most of the 8-weeks pass before you are able to reopen.

The point we’re trying to make is this. There is nothing that says you WIN by having the PPP fully forgiven, and therefore, LOSE if you don’t.  Practice owners who take steps to prudently maximize their loan forgiveness are the ones who will end up ahead, even if that means some of the PPP converts to a loan once the 8-week coverage period ends.

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