SBA Relief Loan Options: What is Best for Dentists?

By Mark Schmidt

As dentists grapple with the COVID-19 crisis, mandatory office closings and limited patient appointments leave many concerned about the future. Without income, cash flow is limited to cover even day-to-day operational costs and expenses.

With so much information available on federal government relief programs, many are unsure which option is best for their needs. At the same time, lenders across the country are working closely with the Small Business Administration (SBA) to understand the details and help borrowers access funds. Let’s take a look at some key provisions that can help dentists determine the best course of action.

Relief from payments on new and existing SBA loans

First of all, good news about payment relief: If you already have an SBA 7 (a) loan, 504 loan, or microcredit, the government will pay the next six monthly payments for you. Perhaps more importantly, any new loan from the SBA, with the exception of the Paycheck Protection Program, taken out over the next six months, will see the first six payments taken by the SBA.

This is a great option for practice owners doing long-term planning and could be a great incentive to help get businesses back up and running. It’s a solid package: You get long terms, large amounts, and SBA payments for six months.

Relief to retain employees

If you need immediate help in retaining your employees, apply to the Paycheque Protection Program (P3). This program is designed to lend a small business 2.5 times their average monthly salary expense, based on your last calendar year, or up to $ 10 million, whichever is less. The loan offers a very low interest rate, no collateral or personal collateral is required, and will be forfeited if used for any authorized purpose.

PPP is designed to help businesses manage the payroll as a whole, which includes salaries, tips, vacation pay, benefits, pension contributions, and some taxes. While the payroll is the defined borrowing base, the use of funds is a little different. Let’s say you borrow $ 200,000 based on your payroll; you can actually use a portion to pay mortgage interest, rent, and utilities.

At the end of the program, or after eight weeks from when you get your money, you can apply for loan cancellation, provided the funds have been used for their intended purpose. If you can confirm that you used the money in accordance with the qualifications, the loan is canceled up to the amount of the use of the funds. As long as borrowers use at least 75% of loan proceeds for salary expenses and then the remaining balance for mortgage interest, rent, and qualifying utilities, the entire loan will be forfeited.

Sole proprietors, independent contractors and independent database administrators are all eligible for PPP. Keep in mind that there are 30 million small businesses in the country and this is a first come, first served program.

Relief if your business suffers economic damage

The SBA Economic Disaster Lending (EIDL) is neither new nor part of the CARES Act; it is generally used by business owners in declared disaster areas. But now that we are facing a nationwide disaster declaration, all businesses across the country are eligible to apply for an EIDL if they have been economically injured by coronavirus.

What’s new is that the SBA now offers an Emergency Economic Damage Loan, which is essentially a grant. Dentists whose businesses have been affected by the pandemic can apply for an emergency economic damage loan and get an advance of up to $ 10,000 within three days. The advance does not need to be repaid under any circumstances and can be used to keep employees on the payroll, pay for sick leave, deal with increased production costs due to disruption in the supply chain. ‘supply or pay off business obligations, including debts, rent, and mortgage payments. According to the SBA, the grants “are backdated to January 31, 2020, to allow those who have already applied for EIDLs to be eligible to receive a grant as well.”

The American Dental Association encourages dentists to apply for an emergency loan, which can be done through the SBA’s website.

What should you get?

What you ask for should depend on the urgency and extent of your needs.

If you need immediate relief of $ 10,000, apply for Emergency EIDL; you can still get what you need with P3, but the rebate amount will be reduced by $ 10,000 (no double deduction). You cannot use two SBA loans for the same purpose.

If you need more than $ 10,000 to cover financial needs that are not urgent and not covered by the P3, consider applying for another SBA loan like a 7 (a). Borrowers can apply for a 7 (a) loan in addition to EIDL and / or PPP.


Marc Schmidt is CEO of Fund-Ex Solutions Group, an SBA non-bank lender participating in the SBA’s Paycheck Protection Program and other financial aid programs. FSG also offers the SBA 7 (a) loan. Visit fundexsolutions.com for more information. FSG is a 100% subsidiary of Bankers Healthcare Group.


Editor’s Note: Visit DentistryIQCoronavirus Resource Center to find more coverage on the COVID-19 disruption.

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