Available lending for dental practices during COVID-19

Your dream doctor. Cheerful dentist looking at camera with smile while sitting in dentist’s office

Dear friends, partners, and colleagues,

I hope that all of you are healthy and well in these challenging days.

All of us on the Integrity Practice Sales team have been doing their best to adjust to working from home as we continue to support our clients looking to sell or acquire dental practices.

As the situation continues to unfold, we will do our best to bring you important news and updates. Please feel free to forward this email to anyone else you think may benefit.

An Update from our Office Team

While Andrea (our listing coordinator) and Alison (our transaction coordinator) are doing well, my (Trevor) personal situation has looked a little different:

An Update on Available Lending for Dentists

The SBA has a Disaster Relief Program with $300 billion allocated. You apply for these directly through the SBA website. They are basically regular loans (must be paid back), but with abbreviated underwriting. They do want collateral, I’m not sure how fast the money will arrive (the website has been overloaded), and the terms are your basic 30 year fixed rate at 3.75%.

There’s another program called the Paycheck Protection Program with $349 billion allocated which was just signed into law hours ago.

It’s designed to keep people employed by allowing businesses to essentially pass their payroll expenses on to the federal government. Here’s what we know so far:

  • These will be handled by an approved SBA partner bank through the 7(a) lending program.
  • No collateral or personal guarantees required
  • Max loan amount is 2.5x average monthly payroll (possibly excluding salaries over $100k)
  • 4.50% rate
  • No payments for the next 6 months.
  • If you can show that all the money was used to keep all your employees employed, you are eligible for 100% LOAN FORGIVENESS.

At this point, I’m not sure how this works if your employees are furloughed. We will keep you updated as we learn more.

If you are interested in this program and don’t already have a relationship with an SBA lender, we’d be happy to put you in touch.

An Update on HR Issues and The Family First Coronavirus Response Act

We’ve seen a number of reports on the sick leave provisions in the second relief bill signed into law on March 18th by the President. You can read the Department of Labor’s summary here. I have seen some recommendations to terminate your staff prior to April 1st in order to avoid being subject to this law.

While you should consult your own legal counsel, we recommend that you DO NOT terminate your employees prior to April 1st.

Basically, beginning on April 1st, the law requires that all employers with fewer than 500 employees offer two weeks of paid sick leave (80 hours for full-time or the average number of hours over two weeks for part-time) to all employees who either get sick or are required to quarantine by a health professional.

There is an additional requirement that employees receive 2/3 pay for 10 weeks if childcare is unavailable and the employee is unable to work from home. It’s not clear that your practice will be subject to this additional 10 weeks. From the guidelines: “Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.”

And if it turns out that you are liable, the financial burden caps out at $12,000/employee for the total duration – if your employee is full time and earning over $37/hour. If the employee is currently earning $20/hour, the max is $6,960.

While burdensome in the short term, “every dollar of required paid leave (plus the cost of the employer’s health insurance premiums during leave) will be 100% covered by a dollar-for-dollar refundable tax credit available to the employer.”

Most importantly, however, is the ethical and leadership issue. This is your team, the people you count on every day to get the job done in your office. The sick leave, as the name implies, is for people who are sick and under hardship. If you lay off your team now, not only are you risking legal trouble with a wrongful termination lawsuit, you are also signaling that you are willing to drop them in their hour of need. Will they be excited to accept a new job offer from you when this is all over? Will they be willing to go above and beyond for you as your practice gets busy again and the backlog of patients is clamoring at your door?

I completely understand that you need to protect yourself and your family right now. But this will be over in the coming weeks (hopefully) or months, and you will reopen your doors. Take care of your team and they will take care of you.

Concluding Thoughts

I hope everyone is managing to stay sane at home. This is a unique historical moment that we’ll be discussing for the rest of our lives. Make the most of it. Be grateful for what you do have.

In recent days Yo Yo Ma has been uploading videos in a series he calls #songsofcomfort. As a cellist myself, I’ve always been a big Yo Yo Ma fan. He is not only an incredibly gifted musician; he is also a phenomenally kind and thoughtful man.

Here is the latest entry (adapted from one of my favorite themes from Dvorak’s New World Symphony):

Stay safe out there.

Good health and best wishes to you and your families,

Trevor Kimball, PhD

President, Integrity Practice Sales

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