PPP Loan Forgiveness and how you can use the funds

Jul 14, 2020

Before you start using the funds, it’s important to understand what qualifies for PPP loan forgiveness. Our clients have been receiving (or will soon receive) funds from the PPP loan all over the country. However, receiving the funds is only half the battle. Next comes the most important aspect of the process: what to do with the funds.

Presently, the SBA has not given a complete picture regarding forgiveness or dispersion of the loan. There is still a lot that we don’t know about the PPP loan forgiveness process and calculation. Here is what we do know:

  • Many people will try to defraud this program. And other intended beneficiaries will miss out. As such, the government will be making many changes over the coming weeks in an effort to better direct the use of funds toward their intended purpose. In addition, it is best to only use funds towards what they are intended for. This way, you won’t be pooled into the group of defrauders, which could result in a smaller percentage of the loan forgiven.
  • After the 8-week period has passed the bank who gave you the PPP loan will have a process for you to apply for forgiveness. Apply to this as early as you can. Because it is likely that they will be receiving millions in the first week and as such may take longer to respond as time passes.
  • It is in the banks best interest to apply forgiveness to as many of these loans as possible as they do not want a 1% loan on their books.

What should I do now with the funds?

Run your practice – including the hiring of employees and expenditure of funds. Do this based on natural economic reasons, not based on the hope of loan forgiveness. This will allow you to be in the best possible position regardless of the degree to which the loan is forgiven. Furthermore, if unpredictable circumstances arise, it would be beneficial to have spent the last few months preparing.

For example, hire your staff to work solely on the basis of the amount of work you have to spread out. If there is a lack of available work, it will not be beneficial to any party to be overstaffed. These decisions should be based on ppp loan forgiveness. Instead, these decisions should be based on patient flow, staff availability, safety procedures you should follow, and the laws in your state. Again, don’t let these loan proceeds, or the desire/ possibility of having the loan forgiven, dictate how you run your practice. (In saying this we do not minimize the goal to have loan funds forgiven; it’s just not the most important thing to consider, and the desire itself will never and should never have an impact on the strategic decision making you employ.)

Recommendations On How To Your Practice

Here are some specific things we recommend in regard to how your practice should be run:

  • Employees– Hire and pay workers on the basis of the actual work performed or needed. If they are on unemployment, don’t start paying them just to get the money forgiven.
  • Rent– During the 8-week period you should be making two rent payments. Even if your landlord has deferred your rent payments, make the rent payments now that you have the loan money. This will prevent charges from piling up and becoming insurmountable in the future.
  • Utilities– Pay as normal, and do not let charges accumulate beyond the point of your control.
  • Loan Payments – Almost all participants will have their loan payments deferred. However, once you receive the PPP funds, we recommend you contact your creditors and make interest-only payments.
  • Paying the doctor – YS will work with each of you to set your own payroll (including your family).

I have the PPP Loan and I am currently on unemployment. Should I pay myself a salary?

The bird in the hand is the unemployment money; the “two in the bush” is the money you may get forgiven from the PPP loan. Similarly, we recommend that you choose the guaranteed payment over the potential of a larger one. As such, if you currently are receiving unemployment benefits, we recommend you continue to receive those (and not pay yourself a salary) until you start working again. Once your office opens and you start performing dentistry, we recommend you get off unemployment and start your salary then.

 What we can do to help with the process

Among other things, here is what we offer our clients regarding the PPP loan:

  • Continue to keep an accurate accounting system, which will be critical when applying for loan forgiveness. This is crucial as a good deal of documentation will be asked of you to provide and without careful diligence it can be nearly impossible to procure.
  • Be completely knowledgeable on the loan forgiveness process, and any changed that may be made to the regulation in place.
  • Help you through the forgiveness application, working to ensure that you receive the maximum amount of loan forgiveness that the law permits.


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