Episode Transcript
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Hi Everyone, welcome to the fourth
episode of catch up with Cairo touch.
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I'm one of your hosts, Dr
Tammy Howard, and I'm excited to talk
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to our CFO, Brad Nelson,
about how to navigate the various financing options
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we have to survive the current covid
nineteen pandemic. Hey, Brad, thanks
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for joining us today. Hi,
Tammy, it's great to be here.
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Before we begin, I wanted to
quickly mention that we've been following the news
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and updates on the pandemic very closely
and love to bring our perspective to the
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car touch community. However, these
podcasts are for informational purposes only. If
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you would like specific guidance on your
practice, your financial advisors or baking reps
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can help you. I'm glad to
have you here. This is an important
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topic, I think that is on
many people's minds right now as they look
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to how their long term financial health
shapes out regarding the closures that they may
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have experienced her significant business impact that
they might have had over last couple of
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months. Before we kind of jump
into things, I think it might be
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helpful to give people a little bit
of an overview of what some of the
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different programs that are available to offices
are to help them get through these times
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financially. Sure, absolutely tammy.
Right now. There's three main programs out
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there that we've been following trying to
fall pretty closely these. Things been changing
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fairly frequently. The first, and
I'm sure most everyone's heard about, is
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the paycheck protection program offer through the
SBA, or small business administration. This
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is a loan that can convert into
a grant if you meet certain requirements for
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how you spend that money. So
I think this is a popular program that's
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out there for small businesses and something
that folks should really look into. Potentially,
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seventy five percent of the loan must
be used for payroll expenses and the
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other twenty five percent of alone must
be spent on utilities, rent and any
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other business in debt that a practice
currently might have. So with those kind
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of requirements, potentially the full amount
of the loan can be relieved. This
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has been frequent updates lately and one
possible update, I think it's in the
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house, is that the requirements for
how the money you might spend will change
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and the amount you have to spend
on pay roll potentially would be reduced to
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sixty percent, and then you can
spend more, up to forty percent on
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utilities, rent and debt. So
always need to continue to check with your
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financial institution, lenders or on sbacom
to find out about new updates to the
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program. There's also another program called
Main Street lending program. This is another
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loan program available for small businesses,
and again these loans would be issued through
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regular banks. The minimum loan size
is a little bit larger. It's five
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hundredzero dollars, but still does apply
for businesses with less than FIFTEENZERO employees and
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five billion in annual revenue. So
while it might be out of the realm
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of many small practices, it's something
else you probably want to look into.
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Another loan for small businesses called the
economic injury disaster loan, or otherwise known
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as the EIDL. This is a
program available for business owners that have suffered
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kind of catastrophic losses or some other
economic injury. As of right now,
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this is only open agricultural businesses,
but again, if you might have applied
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for this previously, they are just
starting to provide the funding to the businesses
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themselves, so I would check in
with your lenders about the status of that.
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Thanks for that background. I know
that there's been quite a bit of
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talk in social media channels in terms
of the paycheck protection program and also the
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Eidel there's been less talk on this
main street lending program, so I think
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it's nice to hear that there might
be a third option and that's available to
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people that they had not otherwise considered. As far as the paycheck protection program
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goes, there's been a lot of
chatter recently on what you'll need to do
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in order to get that potentially forgiven. There's been a lot of talk recently
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online about how can we track that
money to make sure that we can get
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that loan forgiven if possible? Any
tips or tricks on how to kind of
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keep track of that to make sure
that we can apply for that forgiveness when
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the time comes? There's a couple
different ways you can use to help track
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how you're spending your money. The
first one I'd recommend is some sort of
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accounting program like a quick books.
It's very easy kind of use, as
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well as to track an individual expenses
through your business, and that way you
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can make sure that during the period
of time you have to be spending the
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money in a certain way. You
know exactly what you're spending your money on
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by the different categories of expenses.
Another way you could use is just to
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set up a different account at your
credit union or your bank and just issue
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payments through that bank to be associated
with the required expenses for the loan,
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whether it's paywroll expenses again, your
rent until these or previous business debts.
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That makes sense. I know that
a lot of people obviously want to get
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that loan forgiven and have a great
ambition towards seeking that forgiveness so that they
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don't take on additional debts. But
can you give us a little bit of
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an understanding of what will happen to
offer any businesses that would not qualify for
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forgiveness? Sure? I mean,
what the program indicates right now is that
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if you again don't qualify for the
full forgiveness of the loan, the outstanding
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balance would then just continue to crew
interest. It's at a very low interest
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rate, mind you. It's at
one percent and it's for the remainder of
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the two year period of the loan. So from that standpoint it's a very
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low interest loan that would have no
prepayment penalty either. So depending on how
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how long it takes your business to
recover and your cash flow to restore itself
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to be able to kind of pay
this back off, I would say if
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you don't qualify, then it's just
a matter of making sure you can pay
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that off. It has a very
low interest rate. And then just one
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other point here is that always continue
to check back and work with your lender.
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Potentially you can submit additional documentation and
they can give you additional guidance on
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how to try to get your long
reevaluate it so that potentially it might be
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forgiven right. That makes sense.
That one person interest of maybe helps people
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feel a little bit more at ease
as well. If there was any constraints,
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and know that some of the conversations
have also been in regarding maybe a
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portion of that being forgiven and in
the other portion not being forgiven. So
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it may not be kind of a
black and white type of scenario where you
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get it forgiven or you don't.
There may be some percentage of forgiveness available
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as well and then you would just
agree that interest on the remainder that's not
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forgiven. So I think that those
terms are pretty nice you don't generally get
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money quite that cheap out there.
So I know that a lot of people
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are looking for that as their bridge
until they get back to their financial health
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that they were at before. Yeah, another's that's a very good point to
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amy and again I would encourage people
stay in close communication with their lending institution,
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just again for any changes to the
program or for assistance and help kind
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of navigating the various terms and how
it works, because it can get quite
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complicated right and with all the changes
that have happened as well. Now,
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for offices that may not have applied
yet for pepp, are they still able
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to apply for a PPP? I
yes, applications are still being taken and
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we've heard from a number of folks
that sometimes it takes a couple of applications
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to get through it. So it's
a little bit complicated at times, but
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I would persevere continue to work with
your lending institution or your own accountant or
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other financial advisor to help kind of
through the process. Sometimes it might take
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a couple of rounds of applications to
get it through and then, as we've
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all seen in the news, Congress
is approving additional rounds of funding. So
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if you don't get it approved the
first time, I would continue to try.
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Yeah, I've seen getting a lot
of chatter on social media about people
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trying to get through for that PPP
and failing. In fact, of see
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a couple of people that have had
some significant success getting those applications processed through
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paypal, which is interesting because it's
a avenue that maybe not everyone would have
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considered. So maybe a little bit
quicker than trying to go through a traditional
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bank for those. Yeah, absolutely, paypal as kind of started to morph
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like a traditional bank. They do
have credit card and other lending capabilities.
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So yeah, and I know a
lot of the clinics that we have out
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there, their car touge users and
in the chiropractic industry at large, some
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of them do function as kind of
soul proprietors. They may not even have
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any staff that they're working with and
may just be one man band, if
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you would, for those types of
offices. If they don't have employees on
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payroll, can they still qualify for
loan forgiveness? Yes, definitely they can.
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If they are a sole proprietorship or
a partnership and they don't have any
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employees, they can still get a
pay out of about eight weeks worth of
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owner compensation to replace their compensation.
So they can still qualify for that.
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I believe it's based on their previous
year or two thousand and nineteen tax return.
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So again I'd encourage folks to look
at the details of the program potentially
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work with the lenders to understand how
that might work. Again, if there
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are sole proprietorship and they don't have
any employees, for the PPP being based
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off of the payroll expenses that a
company has, obviously the load amounts of
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they're going to be a little bit
on this smaller side potentially, and for
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offices that might need a larger assistant
since program, the main street program,
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might be something that could potentially be
beneficial. What scenarios do you see the
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main street program being Beneithal again,
if the PPP is not enough of a
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loan to cover kind of your full
business expenses and you potentially have had to
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shut down for a month or two
and as you rant back up, I
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mean these loans can be layered in
conjunction with each other, so I wouldn't
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rule out looking at other loan of
loans that might be available and again the
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main street program, while it's bigger
loan amounts, it can be used to
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kind of cover the gap of business
expenses that the PPP. If you still
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want to get that forgiven, you
can use this other loan program to cover
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those expenses. So it's always a
good option to kind of look at that
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to secure additional funding. It's got
a slightly higher interest rate, about three
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percent plus whatever the current Libor rate
is. Live or is basically a benchmark
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variable rate that banks use. So
currently that's going to be kind of in
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the range of three to four percent
total interest. The loan repayment term is
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longer. It's four years versus the
two years of the PPP. So again
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you can use the manage some of
the other business expenses that you might have
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and you've got a longer repayment term, so you can manage that over the
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longer term. Right. Yeah,
this might be a good option for those
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offices that didn't previously apply for the
EIDEL since the EIDEAL has now been closed
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off to everything that is non agricultural. If they previously applied for EIDEAL and
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have gotten that dispursement or will likely
soon get that dispersement. They may not
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need this other gap measure here,
but if it's something where there, if
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they've got the PPP to maybe cover
their pay will expenses, but they need
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to access to other money there to
kind of bridge the gap for them,
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this might be a better option for
them, since that EIDEAL programs no longer
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open to them, and this one
something I haven't heard a lot of people
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talk about. So I think it's
a it's a good thing for us to
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be talking about here on the show
so that people can look into the understand
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it better, considering how things are
changing on a day to day basis.
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What are some of the best areas
for people to stay uptodate on these programs?
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That's a couple of the sites where
we've found has the most relevant and
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up to date information, especially on
things that have kind of passed Congress and
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have become law. Obviously, are
the SBA got go website. That's a
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small business administration website, and again
there's there's a host of information there specifically
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around the coronavirus programs that are available
today. In addition, there's another government
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website called Federal Reserve Dot Gov that's
got additional information there and again, I
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would encourage people to speak with their
local lending institutions, banks credit unions,
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as they will be keeping up to
date on all the exact terms of how
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the loans work, how to apply
for them and, most importantly, how
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to take advantage of, let's say, for example, the PPP, to
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get that fully forgiven. Well.
Thanks again, Brad, for sharing your
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perspective on this topic with us,
and thank you to our listeners for tuning
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in to catch up with Chiro touch. I'm your host, Dr Tammy Howard,
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and will be having a new episode
every single week on spotify, itunes
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and Cairo touchcom backslash podcast. Next
week we'll have Dr Brian Blast and Dr
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Nick Fanning speaking about his family wellness
practice in Nebraska, discuss the different types
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of techniques and chiropractic and the importance
of forming relationships with other chiropractors to be
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successful. If you have questions,
feedback or requests, email us at podcast
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at car touchcom. We would love
to hear from you.
