COVID-19 Action Plan & Resources
Below are our regularly updated, prioritized list of steps to be considered by dentists in response to the recent COVID-19 financial downturn and subsequent government relief programs.
Updated: 04/28/2020 | 12:30pm MDT
*Also included is a collection of related educational content produced by our team and others at the bottom of the page.
1. 60 Day Cash Flow Plan
See a recent study on peak virus estimates for your state. Most clients hope to reopen May 1, some May 15, others in June. Of course, the virus will ultimately decide when we get back to work. We recommend at least a 60-day cash flow plan. If you need more cash to get you through 60 days, talk to your advisor who will provide a recommendation on portfolio liquidations or additional credit sources for you to apply for. To see a recent study from the University of Washington, which estimates virus peak dates by state, click here. (Once there, click on the data visualization and specify by state on the green bar.)
NOTE: If you’d like help with these recommendations be sure to reach out to your advisor who will provide an objective perspective and advice based on your situation.
2. Apply for PPP Loans, EIDL loan appears to be phasing out
(only applicable to practice owners and independent contractors)
- Good read: Ten Things We Need to Know About Paycheck Protection Program Loan Forgiveness ~Forbes
- Helpful Planning Tool: PPP Planning Tool (.xls) ~HDA Accounting Group
- Apply for PPP, but delay your start date. Although you can apply for the 7(a) Paycheck Protection Program (PPP) loan from your local bank now, please communicate with your banker to ensure that your desired start date is closer to your opening date. The program ends on June 30, and you will have to spend the proceeds over the 8 weeks that follow receipt of funds.
- New EIDL, PPP Coordination Rule. On April 2, the SBA issued an interim final rule which clarifies how EIDL loan funds and PPP loan funds are coordinated. The ADA didn’t like the ruling, urging members to lobby, because “through this rule Treasury and the SBA have disallowed any borrower that receives EIDL loan funds after April 3 from being able to apply for PPP loans.” If you read this and felt confused, you are not alone. Reading the actual rule helps a little (see pp. 15-16). Congress won’t let you use both loans for the same thing (specifically payroll). Although you’re not in trouble if you applied for both loans, if you get your $10k advance on the EIDL loan, it “will be deducted from the loan forgiveness amount on the PPP loan” (p.15). Most dentists are unlikely to get EIDL loan approvals after April 3 anyway because payroll is the bulk of their overhead. But feel free to lobby Congress––the ADA feels this final rule contradicts the congressional intent of the CARES Act.
- Be aware that you can apply for both loans for each legal business entity you own. Please consult your banker to understand how they would like you to proceed. To ensure you receive maximum funding, please explain the full extent of your control group (e.g., a practice entity that employs the staff and the PLLC from which the dentist pays him or herself a salary) and your multiple locations, if applicable.
3. Defer Personal and Business Loans and Liabilities
If you haven’t already, you should immediately contact all of your mortgage company, banks (vehicle loans), practice equipment, building payments, and other obligations to request loan deferments.
From what we have observed, most lenders are now putting up links on their websites for requesting deferments and getting answers to FAQs, making it much easier to figure out the right steps to take with each institution.
4. Apply for Home Equity and Business Lines of Credit
Check with your bank(s) about the possibility of home equity loans and business lines of credit. Prepare yourself with a bit more liquidity in case the COVID-19 pandemic lasts longer than expected.
5. Consider Applying for Personal Unemployment
Many practice owners have not considered applying for personal unemployment, although they have recommended their staff apply. Check your state’s unemployment website to see if you qualify and how to apply. Also, don’t forget to apply for your spouse and/or children if they work in your practice.
6. Invest Excess Cash
If you and your advisor feel that you have adequate liquidity and remaining cash, consider rebalancing your portfolios (using conservative assets to purchase stocks that have declined) or re-investing any idle, unnecessary cash. We continue to be in an uncertain market where many stocks and sectors are heavily discounted.
“In the middle of difficulty lies opportunity.”
~ Albert Einstein