The Coronavirus Aid, Relief, and Economic Security Act (CARES) has officially been signed into law. This financial assistance bill has huge implications for dentists deeply impacted by the Coronavirus (COVID-19) Pandemic. Let's talk about it. . .
It's hard to believe that it only took a couple of weeks for the entire landscape of dentistry to change substantially. Dental offices across the Unites States are closed as federal & local government try their best to "flatten the curve", a term that I've heard one too many times. . .
I can only imagine what the future holds for dental protocols such as infection control & patient management. . . .
Until then, let's try to break down the most relevant components of the CARES Act.
Table of Contents
SBA LOANS FOR DENTISTS
Economic Injury Disaster Loans - Section 7(b)
Dentists across the nation are eligible to apply for this SBA Loan which offers up to $2 million dollars at 3.75% interest rate for offices impacted by the COVID-19 Pandemic. These loans can cover many dental expenses including payroll, accounts payable, equipment and machinery purchases, real estate payments and more . . .
The online application process is available now at the following link (APPLY NOW). As you download the necessary forms, mark "economic injury" as the reason for filing.
You will be required to submit a variety of information about your business including the following: tax returns, financial statements, property leases, credit score & more. It will take approximately 21 days for the Small Business Administration to offer a decision & 3-5 days for the loan amount to be deposited via ACH.
Dentists can also receive a $10,000 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 losses.
For more Information from the Chamber of Commerce CLICK HERE
Paycheck Protection Loans - Section 7(a)
Dentists are eligible for up to $10 million available until June 30, 2020. These loans may be used to cover business costs, including payroll costs (pro-rated based on a maximum employee annual salary of $100,000), employee benefits and leave, mortgage interest payments, debt refinancing, rent and utilities.
Importantly, Section 1106 of the Act, titled “Loan Forgiveness,” provides that the Government will forgive the amount of a loan under the Act that a recipient can document was used to pay: (1) payroll costs; (2) mortgage interest; (3) rent and (4) utilities—in each case for up to eight weeks following the issuance of the loan.
More Information - Paycheck Protection Program Information Sheet
SMALL BUSINESS DEBT RELIEF PROGRAM
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will not apply to a PPP loan.
A 7(a) loan is an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. Typically, this loan will be used when building out a dental office.
We will keep you updates as news about this program continues to be updated. . .
RETIREMENT ACCOUNT WITHDRAWALS
Retirement Account Withdrawals for Dentists
This allows for a withdrawal of money from retirement funds of up to $100,000 without paying a tax penalty if individual, spouse, or dependent is diagnosed with COVID-19 or experience adverse financial consequences as a result of being quarantined, furloughed, laid off, or having to work reduced hours due to pandemic
DENTAL STUDENT LOAN DEFERRAL
DENTAL STUDENT LOAN INTEREST & PAYMENTS DEFERRAL
Dentists can defer of federal student loan payments through Sept. 30th with no accumulation of interest. . .
Payment/interest suspension only applies to loans held by the Department of Education, not private loans
Employee borrowers of student loans that receive assistance from their employers in paying off student loans will not have to pay income tax on any payment assistant, up to $5,250, they receive between enactment of this law and Jan. 1st 2021.
More Info on Student Loans CLICK HERE
(CARES) TAX BENEFITS FOR DENTISTS
Deferred Social Security Tax - Employers and self-employed individuals allowed to defer payment of their employer share of the social security tax until Dec. 31st
Federal Tax Rebates - One-time federal income tax rebate in 2020. The rebate amount would be $1,200 for individual tax filers, $2,400 for a joint return and $500 for each child. The amount of rebate will be reduced for single filers making more than $75,000 and joint filers earning more than $150,000
Business Tax Benefits- Even if you don’t want to take any loans out, there are other financial advantages within this Act. The CARES Act makes select changes to tax policies in order to help ease financial burden on businesses affected by (COVID-19)
Businesses are eligible for an employee retention tax credit if:
1. Your business operations were fully or partially suspended due to COVID-19 shut-down order
2. Gross receipts declined by more than 50% compared to the same quarter
in the prior year. .
Eligible businesses can get a refundable 50% tax credit on wages up to $10,000 per
employee and paid from March 13 th - Dec 31 2020
Businesses and self-employed individuals can also delay their payroll tax payments.
The employer share of social security tax owed for 2020, can be deferred and paid
over the next two years.
However, it should be noted that the ability to defer these taxes does not apply to a
business that has a Paycheck Protection Loan forgiven. Additionally, businesses will be able to increase their business interest expense deductions on their tax returns. For 2019 and 2020, the amount of interest expense businesses are allowed to deduct is increased from 30% to 50% of taxable income. . .
LINKS BELOW
- CARES ACT UPDATE
- What Constitutes a Dental Emergency
- COVID-19 Human Resource Discussion
- CDA Updates
- Communication Posters
- CDA Practice Interruption
- CDA Patient Screening
- Guide to Face Mask Selection & Use
- Paycheck Protection Program Information Sheet
- Economic Injury Disaster Loan Application
- CARES BILL
EMPLOYEE MANUAL
STARTING A DENTAL PRACTICE? DOWNLOAD OUR FREE 20+ PAGE SAMPLE EMPLOYEE MANUAL
That's it!
I hope this information helps you choose a practice location for your future dental office. I write this amidst the COVID-19 Pandemic & I hope this global economic uncertainty does not deter you from making your dreams a reality. Stay safe & be well.
Full disclosure: I receive a commission if you purchase the dental products through my referral links. This helps me run this blog & I appreciate the support.
