I have pursued the SBA PPP because I am a physician small business that is organized as a PC, and I am part of the legion of American small businesses that have been impacted by the COVID-19 crisis.
Aren’t Physician’s Making Money In A Pandemic?
The average citizen assumes that a medical pandemic has resulted in an income boost for physicians because healthcare is in the news all the time.
Of course, they are wrong because the majority of us are not located in surge regions, nor are we in service lines connected to COVID-19. Thus, most of us have seen significant reductions in our income the past few months, including 1 in 5 having our employer reduce our pay.
For private practice physicians, this has led to a host of short-term interventions in their struggle to keep their business afloat. The SBA PPP is a helpful bridge for many to help their business to survive. Not only does it help the physician owner get paid, but it helps them pay the staff. This is a critical piece connected to retaining staff, who can easily find other jobs in a very competitive environment for healthcare workers. Staff retention is a huge challenge in physician practices.
For example, my primary nurse has chosen to take a furlough from the practice to work at an extended care facility that has offered her a large financial incentive. This includes leading the development of their COVID-19 unit for nearly $10,000/month. It’s hard to compete with that, and I suspect I may never get her back.
For employed or specialty contracted physicians, the PPP is of no help to them, as those funds go to their employer, the company that generates their paycheck. Even with this government support, many physician employers are slashing salaries and compensation due to massive corporate losses from the moratorium on elective, non-emergency healthcare.
PC’s Are Unique Small Businesses
For me, as I outlined in my last post, I have an employment lite agreement with my PC that has insulated me from most of the challenges that private practice and employed physicians face in regard to the business of medicine during the pandemic.
Due to my unique structure as a small corporation under the pseudonym “Country Doc MD, PC”, I am eligible for PPP funds. This is because my own company writes my paycheck each month. It employs me, and my wife who serves as our bookkeeper. Like most PCs, it is a lean company. This mirrors most small businesses whose employees often originate from within their personal households.
Do I Want A Bailout?
My initial response to this government bailout program was one of passivity for three reasons:
- Because I am a small business with less than a million dollars in revenue annually, I wasn’t sure of the amount of money involved would be worth the process.
- Speaking of process, I figured the process of gathering data and information for proof of the need for a government program would be too cumbersome
- Personally and corporately, I was financially secure enough really not need the loan.
But, as I saw reports of large corporations around the country going after these funds that were framed as forgivable loans, I realized that it would be foolish to turn my back on it.
Civic Duty
After all it seemed like my civic duty to acquire the money that our government wanted to rapidly re-infuse into the economy. So I decided to check into it further.
SimpliMD Team
[the_ad id=”471″]Fortunately, my corporate accounting and legal team called SimpliMD was already working on it behind the scenes, and in essence said “sign here” and they would get the SBA PPP loan documents to the bank for funding. Wow, now that is worth every dime of my fixed fee structure for this dynamic team at KDU who leads my business and fiduciary operations. I didn’t even look at the application that closely, I just did what my team told me to do, and trusted their wisdom. I love that about having a trusted professional team to guide my enterprise month after month.
It kind of reminded me of how I operate with my primary care office team, I depend on them to round up and complete the various forms needed for DME, Home Health, Transitional Care, etc..and I just “sign here”. Beautiful! I trust them to do the work, especially the busy work, and simply sign where needed.
The Traffic Jam At the Bank
As some of you know, the banks and lending institutions ended up being thrust into the drama. They were unprepared and overwhelmed by the loan application process from so many small businesses.
The banks sorted themselves out into 4 categories in regards to helping small businesses:
- For a minority of banks, the bank as a whole AND their commercial banking staff went above and beyond working with clients, started early, stayed late, and nailed it. Everyone in, everyone good.
- Others decided it was too hard, and too much work, so they had their IT department create a web-portal and effectively said, “Do it yourself, and best of luck”
- Yet others had applications come in, and elected to cherry-pick which of those clients (all who had long-standing relationships with them) they would put in first. Not who got their clean application in first, but who they “decided” they should put in first.
- The large banks like CHASE and BofA all did portals, and the process for the masses was slow as expected.
With my application pending, I heard reports that the SBA PPP loan fund had dried up, especially as numerous large corporations took huge chunks of it. Now that’s pretty frustrating when Ruth’s Chris was able to steal funds intended for me!
Denied
I was notified the next day in an email from my bank that my application was not processed in time, and therefore was not funded.
It left me wondering whether I was a victim of large corporate raiders of the fund, or if my bank someone viewed me with less value, thus putting at the bottom of their stack.
Funded
But the good news is that congress rallied, and appropriated more money, and my application got processed and funded.
Although I have been honest, it didn’t happen until I emailed the bank and asked them to check on the status of my application. After getting an immediate “let me check on that” response, I then got an email to say that it was being it was funded. Surprisingly, that same day they sent me the closing documents to sign.
It leaves me wondering what would have happened if I had not called?
The Loan
So I am taking the $22,500 PPP loan for my PC. It is a modest amount that I know I can easily pay back, but I plan to comply with whatever pathway is necessary to make it forgivable.
My accountant is on board with this plan as well.
Terms and Tax Questions
My tax attorney and accountant both note the reporting and tracking process are up in the air and seem to change as we go. Of course, this is very unsettling for small businesses in terms of accepting the loan, but it’s like a lot of vaguely defined things due to COVID-19.
My team also warned me that these forgivable loans will likely get taxed as the IRS seeks to recoup more revenue through the process. This makes it feel like laundered money will be used to refill the treasury. Congress is seeking to over-ride this Treasury interlude and hopefully will succeed.
Small Business Support
I do think that this stimulus package will prove to be a wise investment in the small businesses of America as long as both the IRS and the large corporate raiders can keep their hands out of it.
For my fellow physician-owned small businesses, I hope you are able to gain access to this program as well.
Dr Inc.
