Last night, I received some good news. One of my doctors received an email from the SBA (the body of the email is copied and pasted below)… The bottom line is, the PPP (Paycheck Protection Program) should help doctors get through the pandemic. The trick will be to determine when to accept the loan (the clock starts ticking down from 8 weeks as soon as you do). So, what do you do?
My advice would be to first look at your receivables. If you have a “ton” of money owed to you that has been outstanding for a while (longer than 90 days), you will want to delve into rejections, denials, $0 paid claims, open encounters/missing charges and patient aging and work it like you never have before! If your receivables are in reasonable standing (15% or less in 90 days+), look back at your schedule and find the last “normal” when patient volume had not yet significantly dropped and count forward 45-60 days. This is the time when cashflow may turn to a slow trickle and you will need the funds in order to keep employees on or rehire them. You only have until June 30th to rehire and you have to prove that 75% of the PPP is used for payroll. I would advise setting up a separate bank account for your PPP money and use it for payroll, rent, utilities, etc. (the forgivable expenses of the program). This will make it a much cleaner process when you are asked to prove how you used the funds.
Here is the email from the SBA (the request number and bank information has been changed to ABCD)…
You recently submitted a loan request with us. This e-mail is to advise you that this request has been updated. The following update was added to your request: Your application for a Paycheck Protection Program (PPP) loan has been successfully submitted by ABCD Bank and has been accepted and authorized by the SBA. This means that the funds you requested for your business have been earmarked as part of this program. ABCD Bank is now in the process of completing the review and underwriting of the loan as part of the overall approval process. Subject to loan approval, we will be in contact with you throughout this process to facilitate the loan closing including the opening of a companion deposit account as recommended by the SBA.
ACTION REQUIRED: Please notify us of your preferred funding date for this loan. Keep in mind that loan funding will trigger the start of the 8-week period during which qualifying expenses will ultimately determine the amount forgiven. We anticipate beginning to close and fund loans within the next week. Please respond by either stating ‘as soon as possible’ or by providing a specific date you would like to target for funding, which must be no later than 06/30/2020.
The email ends with a link to the earmarked loan in order to accept/activate it and to check the status.