President Trump signed the CARES Act into law on Friday, providing essential financial support to general dentists struggling from mandated office closures due to COVID-19. The CARES Act includes a financial lifeline for small businesses, sole proprietors and self-employed individuals. Specifically, it outlines ways to access cash and lines of credit, establishes procedures to defer loan payments and unemployment insurance extensions, and makes direct payments to most Americans. Read details about the new law.
“As general dentists, this is an unprecedented medical, financial and regulatory crisis,” said Joseph A. Battaglia, DMD, FAGD, a general dentist from New Jersey and AGD Dental Practice Council chair. “This legislation focuses on the financial aspects of our current situation, giving general dentists access to loans, grants and other resources to support our practices and staff members during this emergency.”
AGD Treasurer Elizabeth Clemente, DDS, MAGD, spent some time analyzing the legislation. “As AGD Treasurer, I wanted to help our members understand the law as it relates to their finances. Certain sections are more specific to our efforts as practice owners and employers, and these details will help members get started. While some opportunities will vary by state, I encourage everyone to look closely at this law as a way to preserve and protect their financial operations.” Read Clemente’s summary.
Payroll Protection Program
One of the most significant provisions of the law is the Payroll Protection Program, a loan program to be administered by the Small Business Administration (SBA). The application will be available through the SBA website, and AGD will notify members when the application is ready.
Eligible entities may seek a loan for up to 2.5 months of payroll and other costs. The law requires applicants to make a “good faith certification” as to eligibility. Further, the legislation includes provisions for loan forgiveness based on a formula relating to the number of individuals employed by the business during the loan period. Eligibility requirements are detailed in the legislation.
“The country is in differing degrees of work slowdown or stoppage,” said Kim R. Wright, DDS, MAGD, a general dentist from Portland, Oregon. “In Oregon, we are mandated to stay closed until June 15. Cash is especially critical right now and as we prepare for when we all open back up to routine patient visits. However you manage the first slowdown phase of this cycle, it’s the gearing back up phase that may be the biggest challenge. Many of us can survive 30 or 60 days, but we need to make sure that we have resources, possibly including a line of credit or other financial resources, to make it through all the expenses we will face with our full-throttle return to work. For my practice in 60 days, my accounts receivable will be all paid up. Thus, no cash flow will be coming in. We will need financial resources for the increase in wages for two to three pay cycles before receivables begin to flow. Much of the advice I’ve heard recommends applying for a loan or line of credit, whether through conventional methods or one of the SBA programs available to us so that you are ready for this gear up.”
Wright noted that members should look at all the options available through the SBA. "There are multiple options with SBA guarantees, and whether or not you qualify for a particular loan may depend on your current availability of credit. Advisors have suggested starting the application process, and, if you apply for the disaster relief loans through SBA that are currently online, SBA will likely allow you to convert your application to another loan type as they come online. The most recent CARES legislation opens up more options for lending, and as it rolls out, I think we will all learn more,” Wright added.
Washington, D.C., general dentist and AGD Board member John W. Drumm, DMD, attended a webinar on cash flow, credit and other resources for dentists last week, and one of the options covered was small business grants. “While the opportunities vary by state, the presenters emphasized that dentists should find out about small business grants that might be available in their state,” he said. “These grants, along with small business loans, could offer important assistance for members who are looking for emergency funds right now.”
The CARES Act also includes:
- Loan forgiveness: The borrower is eligible for loan forgiveness equal to the amount spent by the borrower in the eight-week period following the origination date of the loan on payroll costs, utility costs, and interest payments on mortgages or rent payments prior to Feb. 15, 2020. The amount of loan forgiveness partially depends on if there was a reduction in employees as a result of the COVID-19 shutdown.
- Emergency economic injury disaster loans for organizations with fewer than 500 employees. Grants and loans are not to be used together, so dentists will need to decide which method might work best to make their businesses whole.
- Changes to medical product supply chain: The CARES Act allows for many provisions to improve the medical product supply chain, with changes to the strategic national stockpile, treatment of respirator protective devices as countermeasures, and methods to prevent medical device shortages from occurring in the future.
- Student loan interest: Federal student loan borrowers are allowed some leniency until Sept. 30, 2020. Interest will not accumulate on federal loans held by the Department of Education. Those with federal loans will want to verify their eligibility with their lenders.
AGD will continue to analyze the legislation and will update members on provisions that are of interest to general dentists. Check out the "Staying Connected During COVID-19" webinar series, which will address some of these topics.
Battaglia added that the regulatory aspects of the COVID-19 crisis are mandating that AGD and its members advocate state and local government officials who are promulgating executive orders without sufficient input from the dental community.
“Executive orders on emergency dental procedures without the input of dentists are putting patients at risk and putting an unnecessary burden on hospitals and healthcare systems,” Battaglia said. “Emergency dental care should be delivered in a dental environment — not in the already overburdened hospital emergency room — with dental staff equipped in the appropriate PPE in order to protect our staff and our community. General dentists must work with our specialist partners to ensure patients are free from severe pain and infection while balancing the needs of our frontline medical personnel. AGD is working to help regulators and state officials understand this distinction.”
CDC Guidance Revised
The Centers for Disease Control and Prevention provided an update to its Interim Infection Prevention and Control Guidance for Dental Settings During the COVID-19 Response last week. Key points include advising dentists to postpone elective procedures and surgeries and non-urgent dental visits. The guidance also acknowledges that dental settings have unique characteristics that necessitate additional infection control considerations.