Finance Q&A

Q IFinancial Q&A Financial Q&A

Protecting your investment portfolio

Q. I have a small medical practice that has been severely impacted by the COVID-19 pandemic. I tried to keep my practice open during the initial stages of the virus outbreak, but eventually decided to temporarily close until conditions improve. I’ve heard about financial relief the Small Business Administration is providing to businesses suffering because of the economic disruption and social distancing requirements. Is it too late to apply for financial assistance?

A. The Small Business Administration (SBA) has several programs that might provide some financial assistance for your practice.

The Paycheck Protection Program has received a lot of attention. The program offers small businesses a loan, and an option to have loans fully forgiven if employees stay on the payroll over an eight-week period, and the money is used for payroll costs, rent, mortgage interest, or utilities. Loan forgiveness is not automatic and requires a submitted request to the lender servicing the loan. Lenders then have 60 days to respond to the forgiveness request. The amount of forgiveness will be based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Additional loan terms include: no collateral or personal guarantee, no prepayment penalties, six-month deferral on payments, 2-year loan period, and a 1% fixed interest rate. Eligibility requirements apply and applications must be made through an approved lender by June 30, 2020.

The Economic Injury Disaster Loan program is another way the SBA is providing vital economic support to small businesses. An advance on a loan up to $10,000 is available to eligible applicants experiencing a temporary loss of revenue due to the economic crisis. Funds are available following a successful application and the loan advance does not have to be repaid. Applications will be restricted based on fund appropriations. Full loans are long-term with low interest rates.

The SBA is also providing quick access to funds (up to $25,000) via the Express Bridge Loan program and automatic debt relief assistance (six-month hiatus for loan payments) for current 7(a), 504, and Microloans in regular servicing status.

It is in your best interest to act quickly. These programs are funded through the creation of the CARES Act and the amounts are limited based on participation. In addition, consider contacting a local lender. An existing relationship with a local lender might help you leverage an alternate source of funding until your practice can reopen.

William B. Howard, Jr., ChFC, CFP

International Place II 6410 Poplar Ave., Suite 330 Memphis, TN 38119 Telephone: (901) 761-5068 Fax: (901) 761-2217 whoward@whcfa.com

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