Covid-19 Take Five

We gathered information on a conference/Zoom call last night with 70 of our fellow ADCPA members and wanted to share more thoughts and ideas with you.

As many of you are aware, the Senate passed the CARES Act (3 rd bill) yesterday. While this is not law yet, we will summarize some of the information we have on the current Senate bill as well as the Family First Act (2 nd bill). 

Family First Act

This Act is currently on hold for 30 days and additional information needs to be released from the Department of Labor. The ADA has applied for a blanket exemption for all dental practices at this time.

·          If an employee is off work and meets the conditions provided, you will be required to pay 2 weeks of time. This is in addition to any time you provided before April 1 st . If your employees have been laid off, we do not think it applies.

·          Credits – IF this is mandated (and the ADA still thinks dentists might be exempt), there will be a credit available to you that will cover the costs of the pay (basically you are fronting the government the money). The credit would be applied immediately through payroll filing requirements once this Act actually goes into effect.

·          FMLA – This would require 10 weeks paid to the employee who meets the criteria. We believe that dental offices might be exempt from this too.

This has been super charged in the third bill. In addition, all unemployment offices have relaxed their requirements and they should be receiving additional federal money to help them accept and process claims. 

CARES ACT (Number 3)

As stated above, it has not passed yet, but hopefully will soon. Here are some parts of the bill that we think are important for dentists.

Economic Injury Disaster Loan- Section 7(b) of SBA

  • This is the only SBA loan you should consider applying for currently.
  • The application is only accepted online (not through your bank) – and the website keeps crashing. We feel your pain!
  • This is a loan that will have to be repaid and will not be forgiven.
  • It should be a 10-year term with 3.75% interest rate.
  • This loan is for working capital to weather the storm for the next few months.
  • For a loan made under this program (Section 7(b)), no personal guarantee will be required on loans up to $200,000. 
  • If you apply for this loan, you can request an emergency grant of up to $10,000 which the SBA must provide within 3 business days. Money from the grant may be used to pay for employee sick leave (COVID-19-related), mortgage or rent, and other overhead expenses.
  • This grant will not have to be repaid even if you are not approved for the loan or you choose not to accept the loan once you receive the details.
  • Our understanding is if you accept the EIDL loan- Section 7(b) loan, you will still be eligible for the forgivable loan (Section 7(a)) listed below. Section 7(b) will be converted into the Section 7(a) loan. However, since we don’t have the details yet, we recommend that you do NOT accept any of the SBA loans until the third bill becomes law. We want you to make the most informed decision for your practice.
Paycheck Protection Loan - Section 7(a) of SBA

  • This loan is not currently available yet because the 3rd bill has NOT become law.
  • These loans are fully guaranteed by the federal government through December 31, 2020. 
  • You do not have to rehire or have employees return to your payroll to apply or obtain the SBA Loan – once the Act passes.
  • The loan is limited to 2.5 times the average monthly payroll costs (wages, health insurance, PTO, retirement benefits) not to include payroll taxes. 
  • There will be a calculated amount forgiven. This amount has to be calculated and cannot exceed the sum of the payroll costs, mortgage interest, rent and certain utility payments in the 8-week period following funding
  • To seek forgiveness, an application will be provided to the lender that includes the documented employer costs during the 8-week period subsequent to loan closing. 
  • If you can’t rehire all of your employees or don’t use all of the money from the loan, at the end of the loan period you will return the unused portion of the cash received or covert it into a conventional SBA loan with a 10-year pay back period and an interest rate of 4% or lower.
  • The banks will carry out the application, approval and disbursement of funds. 
  • You will want to contact you lending banker to obtain information on starting the process. 

o    Not all banks will be assisting the government loan program. We will
be generating a list of bankers and their contacts who will be helping with
SBA lending and will Eblast this out to you soon.
  • You will have the option to apply and obtain approval once this loan is available. You may want to wait to accept the loan until you have reopened the office and are staffed again. We will provide more information on this decision in the future but see the bullet below.

o    You do not have to bring employees back to work to qualify for the loan.
If your team is currently on unemployment now, you may choose to leave
them there so they can receive those benefits for now. When (not if!) you
reopen, you would then have the loan to help you pay for wages and other
covered expenses until your collections begin coming in again.

We hope Congress will fast track this bill and we think the timeline will be as follows (fingers crossed):

  • CARES Act signed into law - March 28
  • SBA regulation and guidance provided - April 12
  • Initial loans processed and funded - May 1

In the meantime, stay safe!

Stay sane!

Be patient!

Sending you all a virtual hug!