As a medical, dental or other healthcare business, you are likely feeling the economic impact from the coronavirus pandemic. While you may have planned for a rainy day, no one could have anticipated the magnitude of this crisis nor how long it will last. What you need right now is cash.
The good news is that the federal government has stepped up to help. On March 27th, President Trump signed a $2 trillion stimulus package that included a paycheck protection program (PPP) aimed at helping small businesses. Dubbed the CARES Act, this new law calls on the Small Business Administration (SBA) to back loans through its 7(a) loan program. That comes on top of the Coronavirus Preparedness and Response Supplemental Appropriations Act under the SBA’s Economic Injury Disaster Loan Program, or EIDLP. Collectively, these measures provide assistance to businesses struggling to maintain operations and keep employees on the payroll.
While our blog typically focuses on topics dealing with digital marketing, website design, content marketing and healthcare finance, we wanted to share some information and resources in the hopes that we can help our clients in some small positive way. We are all in this together.
Paycheck Protection Program (PPP)
You can apply for the Paycheck Protection Loan directly through your local lending institution. Key provisions of this program include:
- Available to employers with 500 or fewer employees and who have been in business since February 15, 2020.
- The maximum loan amount is up to $10 million for the period of February 15, 2020, through June 30, 2020.
- The maximum loan value will be:
- equal to the lesser of $10 million or;
- the sum of 2.5 times on the average monthly payroll cost in 2019. Payroll costs include employee wages up to $100,000 including those contractors on a 1099, expenses for paid sick leave, health care, state taxes such as workers comp and other benefits.
- Guarantees 100 percent of the loan, regardless of size. No personal guarantee or collateral is needed.
- Payments are deferred for six to 12 months
- The maximum interest rate for these loans is capped at 4 percent.
What you can use this loan for
- Payroll and benefit costs
- Payments on interest for existing debt
- Rent and utilities
- Interest payments on mortgage obligations
Loans may be fully or partially forgiven
A business is eligible for forgiveness of the loan, dollar for dollar, in the amount equal to the sum of payroll, rent, utilities, rent, and existing business debt during the 8-week period beginning on the date of the origination of a covered loan.
To receive this dollar for dollar loan forgiveness, workers who earn less than $100,000 a year need to remain employed through the end of June. In the case of reduced headcount, lenders may reduce the amount of forgiveness for businesses that lay off employees during the first eight weeks following the loan. If wages of employees who earn less than $100,000 a year are reduced, the level of forgiveness may also get reduced. Businesses that have let employees go before accepting the loan will not be subject to penalties. If those businesses rehire employees after accepting the loan, they’ll receive additional credit to cover wages.
Economic Injury Disaster Loan (EIDL)
For the period between January 31 through December 31, 2020, EIDL eligibility is now expanded to include any business with 500 employees or less. You can apply for an EIDL loan directly through the SBA at www.SBA.gov/disaster.
- Businesses in every state are now eligible to apply for EIDL loans.
- Personal guarantees have been modified and sometimes eliminated.
- Interest Rates are 3.75% for small business
- The first month’s payments are deferred a full year from the date of the promissory note.
- Borrowers can receive $10,000 in an emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments or repaying obligations that cannot be met due to revenue loss.
- Applicants can get the emergency cash even if they don’t qualify for additional funds.
- There are no loan fees, guarantee fees or prepayment fees.
- Small businesses have the opportunity for an immediate advance of $10,000 that will be given within three days of a request. The loan doesn’t have to be repaid if it’s used for payroll, even if you get denied for the EIDL loan in the future.
You can apply for both types of loans (PPP and EIDL), as long as they cover different expenses (not a duplicative purpose).
Help from Google and Facebook
During this crisis, it’s critical to communicate openly with your patients about the status of your office operations, what protective measures you’ve implemented, and how they will be protected when they visit your practice. Continuing to promote yourself on Google and Facebook may also help incentivize patients who may be otherwise reluctant to schedule an appointment with your office.
Both Google and Facebook have offered to help.
Google is offering SMBs with active accounts over the past year with $340 million in ad credits, which can be used at any point until the end of 2020. SMBs will see a credit notification appear in their Google Ads account in the coming months.
Facebook is also offering a grant program for small businesses that will include up to $100M in cash grants and ad credits to help during this challenging time.
We here at Practis are navigating this challenging time along with you. Please reach out if there is anything we can help with.