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Special Dental Update

04/18/2020

As you know, states have extended the “stay at home” order until at least April 30th, 2020.  State dental societies have recommended cessation of in-person dental treatments except for emergencies until at least April 30th as well.  This has made financial decisions very difficult for dental professionals during this uncertain time. Many dentists are now receiving funds from the Paycheck Protection Program (PPP), in which the loans can be fully forgivable if you meet the requirements.  Those requirements are: (1) you need to reach 75% of your prior year comparable payroll, and (2) you have the same number of Full-Time Equivalent Employees (FTE) for the 8-week period following your loan origination date.  These will be difficult requirements to meet if you are facing a prolonged forced shutdown of your practice.

Our previous guidance did not specifically cover the needs of a dental professional, who faces complicated decisions on how to use the PPP funds within the 8-week period. Consider the following items when deciding how to use the funds for the PPP Loan:

  1.  Follow all guidance from the American Dental Association and your State Dental Society on reopening your practice.  Don’t rush to reopen to patients unless you have clear guidance on how to properly do this.
  2. If you are in a shutdown, don’t pay the staff with the PPP funds for not working just to meet the requirements of the loan forgiveness.  It’s not worth it.  It also may be problematic for your staff if they must re-apply for unemployment should the closure remain longer than the 8-week forgiveness period.
  3. Pay yourself at least $8,333 per month, or $4,167 over 4 pay periods, for the 8 weeks after the loan funding date to have this portion of the PPP funds possibly forgivable.  Any amounts higher than that will not qualify for forgiveness.
  4. If you cannot use the PPP funds for staffing cost, try to use at least 25% of the PPP funds for rent, mortgage interest, and utilities which CAN possibly be forgiven.  As per our prior email, PBM can help you track the funds which can be forgiven, and make sure they are not being co-mingled with any other government stimulus payments you may have received.
  5. If you cannot use the PPP funds for staffing and other qualified expenses, understand that a significant portion of the loan will not be forgiven.  It will instead be an unsecured loan with a 1% interest loan for 2 years to cover your expenses during this difficult time.  It’s still a great deal.  But use the funds wisely.  One possible use would be investing in Personal Protective Equipment (PPE) so you can get a jump on opening your practice.

 

 

Your trusted PBM Advisor is happy to help with questions related to your specific situation, and we are available for consultation during this troubling time.  Feel free to reach out to discuss your situation with us, and we can best tailor a plan to accommodate your needs and come up with a detailed plan to use the Paycheck Protection Program funds for your practice.

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