Almost every business has felt the impact of the Coronavirus pandemic, but perhaps none more than dental practices. In fact, a few days ago, the American Dental Association (ADA) initiated a campaign to urge Congress to address dentistry, in the coming round of COVID-19 relief legislation.
With dentists and hygienists being considered as nonessential (except for emergencies), dental businesses are struggling to keep their ventures afloat. Never has financial aid been more needed.
A recent study of 19, 000 dentists showed that 76% of dental practices closed, save for medical emergencies. Unfortunately, a significant number of those surveyed, reported compensating employees with partial pay and to some, no pay at all.
Practices can’t keep operating like this for long. In an ideal business world, there are loans to repay, monthly bills to pay, payroll to maintain, mortgages to make — and with limited revenues due to the pandemic, these practices will soon be going under.
But wait, there is a solution. As we talk, there are several COVID-19 financial aid options available for dental practices and other small businesses. Fast grants, debt forgiveness, and affordable loans, just to name a few, are the options that state governments, local governments, the federal government, and the private sector are employing to provide financial lifelines to dental practices.
Let’s see some financial resources that practices can take advantage of to help them survive and thrive during this period.
Small Business Administration (SBA) COVID-19 Relief Programs and Loans
Besides the traditional SBA funding programs, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) established quite a few new temporary financial aid options to address the COVID-19 outbreak. They include:
- Economic Injury Disaster Loan (EIDL)
- Paycheck Protection Program
- SBA Express Bridge Loans
- SBA Debt Relief
Economic Injury Disaster Loans in response to Coronavirus pandemic
These loans are geared toward assisting small business owners operating in all 50 American states, including Washington, D.C. and other allied territories. Thus, with the EIDL, small businesses, dental practices included, can get an advance of up to $10, 000 if their application is approved.
Specifically, the EIDL is meant to offer immediate financial relief to businesses struggling with temporary loss of revenue. Once an application is submitted and approved, the loan is deemed as a debt relief grant and need not to be repaid.
Your business must have less than 500 workers to be eligible for an EIDL. The program also covers independent contractors, private nonprofit organizations, self-employed people, and sole proprietors. More so, it covers 501(c) (19) veteran organizations, which are affected.
Once you have applied and an approval has been made, funds are channeled to your accounts within days. And like we mentioned above, the loan is viewed as a grant and doesn’t have to be repaid.
Paycheck Protection Program (PPP) Loans
Since the first week of April 2020, the SBA has been processing loan applications for the PPP. The program is meant to be active up to June 30, 2020, though this may change.
Generally, the Paycheck Protection Program is a loan that offers small businesses an incentive to maintain their staff on the payroll during this COVID-19 outbreak. The program presents a win-win situation: the workers get their full wages, and businesses afford to stay in operation.
Business owners are eligible for PPP as long as they keep their employees on payroll for eight more weeks. However, besides supporting the payroll needs of a business, this loan can be used to pay for utilities, rent, or mortgage interests during.
Applying for a Paycheck Protection Program loan is quite straightforward. Dental practices can do so via any existing SBA 7(a) lender, or through any credit union, FDIC bank, or any Farm Credit System organization, which is participating in the program.
SBA Express Bridge Loan (EBL)
To complement its existing economic relief and disaster loan options, the SBA launched the EBL pilot program to offer expedited loans for small businesses that have been affected by the pandemic.
Having a borrowing limit of $25, 000, the EBL funds are paid out as working capital and should be spent “exclusively” on expenses associated with survival or reopening of your business.
Your practice must meet the following requirements to qualify for COVID-19 EBL:
- Has been operational as of March 13, 2020
- Has less than 500 employees (but this may vary for certain industries)
- Has been badly impacted by COVID-19
- Has a pre-existing relationship with a bank or lender that offers Express Bridge Loans as of March 13, 2020.
Keep in mind; the exact loan terms will depend on your lender, situation, and business structure. However, here are the standard parameters you can expect:
- No collateral is required.
- The maximum interest rate, practices can be charged on Express Bridge Loans is 6.5% plus the prime rate. That is very remarkable since this is the rate that commercial banks and lenders charge their most creditworthy clients.
Debt Relief Program
Debt relief program provides instant relief to businesses with non-disaster SBA loans, specifically 504, 7(a) and microloans. Under the debt relief program, SBA will cover all loan repayments aspects, including principal, interests, and related fees, for six months.
The program will also be accessible to new borrowers who seek out loans within six months of President Trump signing the bill into law. You can read FAQs about the SBA debt relief program here.
Tax deferments and employee retention credits
The Internal Revenue Service (IRS) has pushed forward the deadline for filing tax returns to July 15, 2020. In other words, employers can defer part of the Social Security payroll tax. This measure won’t necessarily save practices and businesses money since they have to pay the taxes later; however, it could help free up funds for the struggling ones.
Also, the IRS is giving a refundable tax credit for businesses forced to close operations partially or entirely, and who suffered more than 50 percent loss of gross revenue. Essentially, the credit is meant to encourage businesses to keep workers on their payroll and equals a tax credit of 50 percent of wages of up to $10, 000 per worker. Note though, the program is not available for those ventures that qualify for the PPP.
Local and state financial assistance options
Local and state governments have also not been left behind. They are providing everything from grants to non-interest loans to microloans, to businesses and practices struggling financially amid this COVID-19 crisis. Here are some examples of the financing programs they are offering:
- Connecticut is offering 0% one-year bridge loans of no more than $75, 000 to businesses harmed by Coronavirus. However, for businesses to be eligible for this loan, they must provide evidence they were profitable before the pandemic happened.
- Denver is also providing microloans ranging from $5, 000 to $50, 000, to small businesses impacted by Coronavirus.
- New York City is providing businesses (with less than five staff members) grants of up to $27, 500 to cover 40 percent of payroll expenses for two months to help retain workers.
There are many other local and state financial resources available to small businesses. However, for up-to-date information about the financial aid programs near you, review this state-by-state list.
Coronavirus business grants through private companies
- Facebook’s Small Business Grant Program — Facebook is providing $100 million in grants to small businesses all over the globe. These grants are available in the form of cash and Facebook ad credits. The money can be used to pay rent, take care of employees, and cover operational costs. To learn more about the Facebook grant program, make an effort of visiting their application page.
- Amazon’s Neighborhood Small Business Relief Fund — Amazon is offering grants worth $5 million to businesses in the Seattle area that have been badly hit by Coronavirus, focusing more on businesses that rely on foot traffic. You can qualify for this funding if you have less than 50 members of staff or make less than $7 million in revenue annually. Visit their page to make your application.
Get the financial assistance your practice need
It takes a little funding to make big things happen; therefore, don’t hesitate to seek for the financing your dental practice needs. Even if you do not really require the assistance yet, it’s advisable to go ahead and apply for at least one of the programs mentioned above. For instance, the EIDL program can take approximately thirty days from application to funding. Thus, it is sensible to get started as soon as possible, mainly since there is no application fee involved.
America needs dental practices like yours today and in the coming years. Though your services might be viewed as nonessential, they are crucial when we return to post Coronavirus (i.e. normal life). Seek the funding you require to survive now and thrive later.