ADC provides further clarification based on ADA’s April 4 communication regarding dentists’ eligibility to apply for both an Economic Disaster Loan (EIDL) and a Check Protection Program loan payroll (PPP).

Yesterday, the American Dental Association sent out a communication regarding dentists’ eligibility to apply for both an Economic Disaster Loan (EIDL) and a Paycheck Protection Program (PPP) loan. The ADA’s communication was aimed at ensuring that the language of the Interim Final Rule was perfectly clear.

CDA provides further clarification and has consulted with the ADA and other entities on behalf of our members in order to remove some of the confusion many of them experience regarding the funding options available during the crisis. COVID-19.

The ADA Local Action Alert indicated that small businesses must choose between the two loans and that small businesses cannot receive both loans unless a qualified business receives its EIDL funds at the latest. April 3.

After reviewing the Interim Final Rule and Small Business Administration guidelines released on April 2, as well as additional information from lending institutions and accountants, the CDA interprets that member dentists may request both the EIDL and PPP loan, with the understanding that small businesses cannot use funds from both loans to cover salary costs.

J. Haden Werhan, CPA / PFS of Thomas Doll, specializing in wealth management, accounting and tax services for dental practitioners, notes that the language included in the CARES Act and SBA guidelines has caused some confusion . He says, “At the end of the day, you can’t ‘double taxes’… if a dentist has an EIDL and has used those funds to pay for salary costs (forgivable / covered period) then they can’t use the EIDL. proceeds from a PPP loan to cover these same salary costs (discount period / period covered). In the event that a person has used the EIDL products to pay the salary costs (discount period / period covered), this EIDL amount should be “built in” to the PPP loan. What does this really mean? Dentists can have an EIDL SBA and they can have a PPP loan (obtained from a bank), but only a certain calculated amount of the PPP loan is eligible for remission under the CARES Act.

Werhan further notes that at least 75% of the PPP loan must be spent on salary costs (see table below), which leaves up to 25% to be spent on other covered expenses. The period covered is eight weeks from the financing of the PPP loan. If the loan recipient uses up their PPP loan proceeds in six weeks and uses the EIDL proceeds to pay off the remaining two weeks, or vice versa, they have not doubled and the entire eight weeks’ expenses are waived. The two weeks of the EIDL will be integrated into the PPP loan. Or, use the entire PPP proceeds on covered salary costs and the EIDL on other covered costs.

Additional considerations:

• There is a difference between the amount borrowed under a PPP loan and the amount handed over under a PPP loan. A borrower can borrow more than can be given (see table below).
• If the beneficiary has used the EIDL products to pay the salary costs (discount period / period covered), this part of the EIDL should be included in the PPP loan. In addition, the beneficiary has received a grant of $ 10,000 from EIDL, this grant will be subtracted from the eligible expenses of a PPP loan.
• There are no prepayment penalties for EIDL or PPP loans.
• When applying for a PPP loan, it is important to use a bank you already have a relationship with assuming the bank is an SBA Senior Lender or a lender that only issues SBA loans.

CDA encourages its members to seek individual financial advice from their accountant or financial advisor to ensure they are getting the right advice based on their individual circumstances. An accountant or financial advisor will help dentists identify the financing options that best meet their needs and ensure the viability of their dental practice.

CDA will monitor the regulation of EIDL and PPP loans and notify members accordingly. In addition, CDA will continue to advocate for help and serve our members and the dental profession using every opportunity possible. Keep checking cda.org/covid19 for the latest COVID-19 news and resources for dentists.

Additional Resources:

CARES Act Loan + Assistance Programs (Thomas Doll)

Applying the Paycheque Protection Program (Small Business Administration)

Pay Check Protection Program Interim Final Rule (Small Business Administration)