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The CARES Act (H.R. 748) was signed into law by President Trump just hours ago. Much of the contents of the bill have been public information for days and have been blowing up every dental-related Facebook group in America. You can read the full contents of the bill (here); we have read almost every word that applies to you, with particular focus on the new SBA loans and the promise of free money.

Emergency EIDL Grants (Section 1110)

The rumors are true. Through an SBA loan, you can be granted up to $10,000.00 if the money is used for staff costs, rent, business debt payments, or other business expenses that you can’t pay because of revenue loss. We give detailed instructions on how to apply for this loan here: https://practicefinancialgroup.com/apply-sba-economic-injury-disaster-loan-eidl/

Here are some important things to glean from this provision of the bill:

• Eligibility; check, you’re eligible (less than 500 employees)
• Emergency Grant
  • This is requested as an “advance…not more than $10,000.
• Use of funds:
  • Providing sick leave to employees unable to work due to COVID-19 (not applicable if your office is shut down)
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns (not applicable – you’re not paying your employees)
  • Making rent or mortgage payments (mortgage = loan on the building, practice purchase note or equipment note)
  • Repaying obligations that cannot be met due to revenue loss
• Repayment – you’re not required to repay up to $10,000.

Is there a “first come first serve” order on this? Yes. The SBA was granted $10,000,000,000 to carry this out. They will dole this out until it is gone.

SBA 7(a) Relief Loans

These loans will be administered by private banks, authorized to approve SBA loans. Although the legislation is out, we do not recommend taking action on this loan yet. The terms of this loan apply for all of 2020, and unlike the EIDL loan, there is no first-come-first-serve basis (no rush). We will provide more guidance on these loans in the coming days.

Remember, other than the $10,000 mentioned above, and the few possible provisions of loan forgiveness in the 7(a) loan (the legislation is out; we have read it word for word, but are waiting for further interpretation as the law gets applied), these are loans. And almost never do we recommend that you hastily run out and borrow money. Again, we recommend putting a hold on this one.

Sincerely,

PFG Advisory Team

As recommended in a previous communication, we recommend applying for the EIDL loan; the first $10,000.00 will be a “grant” (free money) from the government if used for the following:

• Providing paid sick leave (not applicable if your office is closed)
• Maintaining payroll (not applicable if office is closed)
• Making rent or mortgage payments (yes, applicable if you pay rent or if you have a loan on your building, a practice purchase or equipment loan)
• Repaying obligations that cannot be met due to revenue loss (other bills)

To clarify, we recommend borrowing $10,000.00 on this loan; this is free money. Any additional amount you borrow is a formal loan that you will have to pay back; we only recommend you borrow more money if you actually need it.

Frequently Asked Questions:

• Do I fill this out for my partnership or S-Corp?
  • Fill this loan application out for your partnership. The purpose of this loan is to cover payroll, rent, and other necessary business expenses. Your largest expenses are going to be at the partnership level.
• Do I fill out a separate application for my real estate entity?
  • No, fill this out for your dental practice only.
• Do I fill this out in my own name, or the name of the practice?
  • This is a business loan; fill out this loan in the name of the practice and provide information (i.e. tax returns) from your practice.

Instructions for filling out application

Go to the following website and apply for the SBA Economic Injury Disaster Loan (EIDL): https://disasterloan.sba.gov/apply-for-disaster-loan/index.html

Please complete the highlighted forms below:

Business Loan Application (Form 5)

• Check box for “Economic Injury:

• Check the box most relevant to your entity’s organization type, most common will be Limited Liability Entity. Info can be verified via your tax return, which will say “LLC” or “PLLC” (both Limited Liability Entities). If your entity is a PC or a PA, then select the “Corporation” option.

• Complete the following info as it relates to your business entity:

• Complete the remainder of the application as it relates to your practice and individual situation.

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Economic Injury Disaster Loan Supporting Information (Form P-019)

Please obtain the following information from your PFG-prepared Income Statement by doing the following:

1. Return to https://practicefinancialgroup.com/
2. Click “login” then “Net client login”
3. On the left-hand pane, select the name of your practice
4. Select “Accounting”
5. Select “12-31-19” of the folder appropriate folder for the info needed
6. Open “Financial Statements XX/XX/XX”

Please do the following to answer the 2^nd & 3^rd questions:

• Gross Revenues for the twelve (12) month period prior to the disaster, formula will be as follows:

• Cost of Goods Sold for the twelve (12) month period prior to the disaster, formula will be as follows:

• Loss of rents due to disaster: this will not apply to you since your dental practice is not renting property to any other entity.

Please answer all other questions on Form P-019 as they apply to your own situation.

Personal Financial Statement (SBA Form 413D)

Fill out this form with the most up-to-date information that you have available to you. Below is a guide to locating information for some sections we most frequently have questions about.

1. IRA and Other Retirement Accounts
   • You can find the balance in your PFG-managed IRAs and 401k by going to https://practicefinancialgroup.com/
   • Click “Login” and “PFG Investments”
   • 
   • Once logged in, you will see a list of accounts on the left-hand side, along with the balance in each account. Retirement accounts include those labeled “401(K)” “Defined Benefit Plan” or “IRAs”
     1. Your IRAs may have longer names, such as “Roth IRA Contributory” – these are still IRAs for this section
     2. Most of the time your 401(k) is a “pooled” account; therefore, as a general rule, use 75% of the balance for your own 401(k) balance
   • The total for IRAs and Other Retirement Accounts is the sum of the accounts listed above. Provide the total on page 1 of the form and a listing of each account below in Section 5
2. Stocks and Bonds
   • This section applies only to doctors with taxable investment accounts. If all of your accounts qualify as retirement accounts (above), then no need to fill out this section
   • In your PFG Investments portal, click on your taxable account (“JTWROS” or “TOD” for an individual account)
   • The amount listed by the name is the total amount to be reported on page 1 of the Personal Financial Statement form
   • More details are required in section 3. To find those details:
     1. On the bottom right of the screen is a section labeled “Holdings” click on the “More Details” button in this section
     2. A screen will appear on the right. Click on “Detail” at the top of that screen.

• Here you will find the information requested on the SBA form, including Number of Shares, Name of Securities, Cost, and Market Value.

3. Salary
   • Return to https://practicefinancialgroup.com/
   • Click “login” then “Net client login”
   • On the left-hand pane, select the name of your practice
   • Select “Accounting”
   • Select “12-31-19”
   • Open “Financial Statements 12/31/19”
   • On page four of the financial statements, you will find your salary under “DR Salary” in the “Year to date” column
4. Net Investment Income
   • This is where you report income from rental properties or other investments you own outside of your PFG-managed investments. Don’t include a self-rental property (if you own your practice building)
5. Other Income
   • This is where you include your net income from the practice. This can be found on page four of your 12/31/19 financial statements (see instructions above under “Salary”)

*Quick Note: don’t get hung up on having the exact number (for example, Net Investment Income); getting close is good enough here.

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Request for Transcript of Tax Return (IRS Form 4506-T)

Go your PFG portal and pull up your 2019 (or 2018) business corporate return (or partnership return).  Commonly used form will be Form 1120-S (or Form 1065 for Partnerships), as shown below:

Form 4506-T will be complete using the info above

• Line 1a, will be name as show on your corporate (or partnership) tax return.
• Line 1b, will be Employer identification number
• Line 2a & 2b, leave blank if you practice files an 1120-S, 1065
• Line 3, current address – must match address on tax return
• Line 4, complete only if applicable
• Line 6, applicable form (1120-S is more common for PFG clients)
• Check Box 7
• Check Box 8
• Box 9, leave as is
• Check Box for Signatory attests
• Include phone number, sign, and date

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Schedule of Liabilities (SBA Form 2022) – please use instructions provided by SBA

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Instructions for Additional Filing Requirement (SBA Form 1368)

This information can be obtained by the Statement of Revenue and Expenses prepared by PFG.

1. Complete the highlighted yellow as shown above
2. The fields circled in red will come from your PFG prepared Income Statement – Net Collections for each month (these are total collections numbers, after adjusting for insurance)
3. Numbers 1, 2, and 3 in blue above will reasonably match the Gross Income reported on your tax return. Form 1120-S, Income, Line 1c
4. Page 2 (Forecast) is not required.

We hope this is helpful; if you have questions let us know.

PFG Advisory Team

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New Guidance on Employees – updated March 27, 2020

We are not employment law or HR experts. We have never claimed to be. But if you wake up and see your neighbor’s house burning down, do you sit back and watch because you’re “not a fireman?” (maybe it depends on which neighbor 😉)

This post is not intended to be a comprehensive FAQ on all employee-related issues. A few sources we have been turning to for clarifying advice, which we recommend to you, are:

• HR for Health
• Bent Ericksen & Associates

Additionally, we have been reading the text of the actual bills that have been passed recently, searching for relevant guidance related to your practice.

Emergency Family Medical Leave and Paid Sick Leave

Recently the DOL clarified legislation that came out in bill H.R. 6201 regarding required sick leave and emergency medical leave. Officially, if your office is closed due to COVID-19 reasons, you do not have to pay your employees the 14-day sick leave, nor emergency medical leave (EFMLA). Here is what you should do:

• Do not fire your employees (as has been our consistent advice). It may be difficult to ask for and expect loyalty from them if you abandon them now.
• Pay your employees for actual work performed, actual hours worked (consistent advice). Don’t pay them beyond this and don’t invent work to keep them after you’ve closed; if you have promised to pay them beyond hours worked, consider revising that promise. They should all be eligible for unemployment benefits.
• Tell your employees to go apply for unemployment insurance (consistent advice)

When your office reopens and you are seeing patients again, the paid sick leave and EFMLA benefits may apply to you and some of your employees, if they are eligible. We will help you deal with those one-off cases as they come up…after you are open for business again!

What other action should you take regarding your employees?

• Stay connected to your team. Call them, text, Zoom, etc. Be their friend and look out for them.
• If they have PTO (sick or vacation time) saved up, you’ll have to negotiate with them when they cash this in. Hopefully they can save and use it later.

Health Insurance

If you provide health insurance for your employees, do not stop paying the premiums. This would be a bad time to cut people off health insurance benefits. If the employee is responsible for paying a portion of their premium, you should continue to collect that portion of the premium from the employee. If they cannot afford to pay their portion, we recommend you work out a deal with them for you to pay and for them to reimburse you once they start working again.

Unemployment Benefits – Should I, the doctor, apply?

The new bill – H.R. 748 or the “CARES Act” – has many provisions to bolster and increase unemployment benefits. To determine the exact amount of benefits, each individual should apply through his or her state unemployment department, as we have been saying consistently for the past week.

Should you, the doctor, apply for unemployment benefits? Each state will handle this differently and each case will be handled differently. We don’t know if you will be approved by your state or not; however, we don’t think it would hurt to apply.

What if I already terminated my employees?

We know of some doctors who panicked and fired all their employees immediately. Others acted on bad advice given in a webinar sponsored by a large dental CPA firm. Regardless of why you did it, if you went against our advice and terminated your employees, we recommend hiring them back as soon as possible (undoing what you did). Depending on what steps you took to terminate them, this may be as simple as a phone call to say, “just kidding.” You may have to grovel, beg forgiveness, or whatever.

Regardless of what you need to do, having employees who are not working will not cost you anything. Wanting to open your office again and not having any employees will cost you a lot!

We will provide further updates and information as we have it. If you have any questions, recommendations or helpful information, please email us at coronavirus@practicefinancialgroup.com.

Sincerely,

PFG Advisory Team