Last updated: April 20, 2020
Everyone is flooded with messages about the casualties left in the wake of SARS-CoV-2 (A.K.A. “The New Coronavirus” and “COVID-19”), but what we all know as small business owners is:
We’re fighting to keep our staff, our personal finances, and our overall business off of life support too.
Everything made available to small businesses and their employees right now is overwhelming. Even diving into the source of the stimulus package, the 880-page CARES Act, is difficult and overwhelming.
There’s a lot of misinformation floating around the optometric community right now about what your best options are for surviving SARS-CoV-2. Part of the problem is, everyone is operating off of and spreading hearsay. This game of “he said, she said” creates more confusion than clarity.
We’ve read and interpreted the actual stimulus bill (you can review our highlighted and marked-up copy of the 880-page CARES Act here), and will provide a source for everything we state in the Survival Guide below.
Even as we fight to keep our own young company alive — our primary focus remains the same: Helping our members take back control of the optometric and optical industry.
To that end, we are:
- Doing our best to negotiate extended payment terms with all of our vendors on your behalf.
- Publishing this guide so you can decide which path is best for your personal business.
This SARS-CoV-2 Survival Guide will be updated as often as possible whenever official information is released. Here is all of the information we know so far:
SARS-CoV-2 Survival Guide Table of Contents:
Use the links below to conveniently navigate this comprehensive guide. You will also see a “Top” button in the bottom-right corner of your screen to navigate back to the top of this page at any time.
- Important Disclosures About this Guide
- Navigating the Paycheck Protection Program (Forgivable Loan)
- Maximum loan amount
- How long will approval take?
- When and where can I apply?
- Who qualifies?
- Which expenses under these loans are forgiven?
- What payroll expenses qualify for forgiveness?
- When does the eight-week forgiveness period begin?
- Can I choose which eight weeks I apply the forgiveness to?
- Does this also cover non-employees (part-timers & contractors)?
- Does this include MY payroll as the business owner?
- How to calculate the number of employees forgiveness will be based on (reduced forgiveness)
- Do all SBA loans qualify for forgiveness under the PPP?
- What’s the interest rate on non-forgiven expenses?
- Will I pay any interest if the loan is forgiven?
- How long will I have to pay off any balance that is not forgiven?
- What documentation will I need to apply?
- Scenario #1: You haven’t yet laid off any employees
- Scenario #2: You’ve already made furloughs or layoffs, but you choose to hire them back
- Scenario #3: You’ve already made furloughs or layoffs, but you choose NOT to hire them back
- “What if I still have questions that weren’t answered here?”
- Navigating Economic Injury Disaster Relief (EIDL) Loans
- Navigating Layoffs & Advising Employees On Improved Unemployment Options
- What factors to consider when laying off employees
- Choosing whether or not to bring back employees you’ve already laid off
- Can I lay myself (the business owner) off?
- Expanded unemployment benefits as part of the CARES Act
- Loosened requirements as part of the CARES Act
- Expedited relief (no waiting period) as part of the CARES Act
- Taking care of and providing guidance to employees you need to layoff
- Closing Thoughts & Advice for These Difficult Times
- Revision History for this Guide
Important Disclosures About this Guide
It appears that every company under the sun is trying to bail water out of their own boat and into yours by selling you whatever they can think of, which is something we're firmly committed to NOT doing here at Pivotal.
No one staffed at Pivotal Group is a legal, policy, or financial expert. The insights and guidance shared in this guide are based on our personal interpretation of the language of the bill.
We have personally read every portion of the bill that’s discussed within this Survival Guide, and you can review our highlighted and marked-up version of the 880-page CARES Act here »
Whenever we’re discussing topics that are creating a large amount of confusion, we will cite the source within the original CARES Act linked above that led us to our official stance shared within this guide.
We sincerely hope this guide helps you. Don’t stop fighting, and keep your chin up.
Our thoughts are with each and every one of you from down here in Austin, TX —
The Pivotal Group Team
1508 Dessau Ridge Ln Ste. 806
Austin, TX 78754
Navigating the Paycheck Protection Program (Forgivable Loan)
If you’re seeking information about the loan that allows forgiveness for eight weeks of qualified expenses, this is it.
The CARES Act is designed to help small business owners "keep the lights on" and keep staff employed during the economic fallout caused by COVID-19.
The government has approved unprecedented relief to not only provide a loan during these times, but also forgive that loan (effectively making it a grant) for a large percentage of most doctor's operating expenses.
Maximum Loan Amount
This does not mean that 2.5 months of payroll are being forgiven (detailed later in this guide) — only eight weeks of payroll expenses will ultimately be forgiven (page 41). The extra 0.5 months in this calculation allot for rent, utilities, and mortgage interest that will also be forgivable during this eight week period.
“Monthly payroll” used for the 2.5x maximum loan calculation will be based on the 1-year period before your PPP loan funding date (page 18).
How Long Will Approval Take?
The government has removed many barriers that traditionally bog down the SBA approval & underwriting process (not requiring collateral, dramatically expanding lenders, every loan being guaranteed by the federal government, and more — pages 24-25), so these loans are speculated to be approved as quickly as 1-2 weeks from the date of application.
When and where can I apply?
Applications are currently being accepted by SBA lenders, banks, credit unions, and lending networks across the United States.
You should be able to apply through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program (source). For example, PayPal and Intuit were added as approved lenders during the last week of Congress' initial $349BN PPP processing.
EVERY lender is going to be flooded with PPP applications.
No lender is going to be perfect during the overwhelm created by the PPP, but what's become clear since PPP funding became available is: Your best chances of getting approved appear to be with small, local banks or SBA lenders.
Many doctors saw success with PayPal and Intuit once they began processing, but be aware: These companies were not flooded with applications for two weeks prior like many other lenders were. By the time they were approved to process, most people had already chosen and were committed to another lender. It's distinctly possible that, especially with their success towards the end of the initial $349BN PPP funding, PayPal and Intuit will be just as bottlenecked (if not more) than other lenders during the additional $250BN in PPP funding.
Despite many banks' recommendation to only apply with one lender, we have received multiple reports of doctors applying with more than one lender successfully. It did not negatively affect their ability to get approved.
If you apply with mulitple lenders, we strongly being diligent about canceling your other applications when a single application is assigned a loan number by the SBA. This means that your loan is processing with the SBA and on-track for approval. Prior to that, it was unreported to the SBA and only within your chosen lender's system.
Virtually every small business owner with <500 employees, self-employed personnel, and independent contractors in business prior to February 15, 2020 are all granted relief under the CARES Act (page 15).
Which Expenses Under These Loans Are Forgiven?
Every qualifying dollar that you spend on payroll (salary cap of $100K/ year) including healthcare, utilities, rent, and business real estate mortgage interest for eight weeks after the date your SBA loan originates will be forgiven 100% (pages 20 & 43).
What Payroll Expenses Qualify for Loan Forgiveness?
Payroll expenses qualify for forgiveness if the employee is paid at least 75% of their regular salary during the eight weeks after your loan originates, and remain employed by your business through the end of your 8-week “covered period,” (page 43) which for the section pertaining to loan forgiveness, is defined as, “...the 8-week period beginning on the date of the origination of a covered loan” (page 41).
Per the Treasury Department's Interim Final Rule, at least 75% of forgiveness must be tied directly to payroll expenses. No more than 25% of your forgiveness may be linked to rent, utilities, or mortgage interest.
This includes health benefits, retirement, vacation time, cash tips, and more (pages 10-13)
This appears to also apply to independent contractors, part-time employees, and self-employed personnel (pages 10-13).
There is a salary cap for forgiveness of $100K/ year (i.e. if any employee's salary is $150K/ year, the maximum loan amount and loan forgiveness only applies up to $100K — page 12). If you cut an employee's pay by more than 25%, loan forgiveness begins to taper off until it disappears completely (pages 45-49).
When does the eight-week forgiveness period begin?
The day your loan originates, i.e. the day your loan funds (page 41).
Can I choose which eight weeks I apply the forgiveness to?
This is something I’ve seen rumored, and I believe it stems from this document released by GOP congressional leadership (see “What is the covered period of the loan?”).
However, we have been unable to verify this is the case within the text of the 880-page CARES Act. The CARES Act clearly defines the PPP’s 8-week forgiveness start date as, “...the 8-week period beginning on the date of the origination of a covered loan” (page 41).
Does this also cover non-employees (part-timers & contractors)?
Yes. This appears to also apply to independent contractors, part-time employees, and self-employed personnel (pages 10-13)
NOTE: Do not include your contractors' payroll expenses in your business' PPP loan calculations. Independent contractors must apply for their own PPP loans, details of which can be found here »
Does this include MY payroll as the business owner?
Yes. From the CARES Act:
“The term ‘payroll costs’ — means — … (AA) salary, wage, commission, or similar com- pensation; ... (bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as pro- rated for the covered period;” (pages 11-12).
This phrasing also leads us to believe that owner equity distributions would factor into your forgivable payroll calculation as well, assuming it did not put you over the $100,000 annualized forgiveness cap:
“...any compensation to or income of a sole proprietor… net earnings from self-employment, or similar compensation.”
However, owner equity distributions are not well defined within the CARES Act — please confirm with your lender before finalizing the loan amount you’re requesting.
How to calculate the number of employees forgiveness will be based on (reduced forgiveness)
This is about to get complicated. The source for everything you’re about to read is found on pages 45-49. Anytime the government uses the words “the quotient obtained by…,” be prepared to get confused.
First thing’s first: you have two choices to use as your “baseline” number of full-time employees for which your “covered period” (the 8-week period beginning the day your loan funds) will be compared against:
- February 15th, 2019 to June 30th, 2019, OR…
- January 1st, 2020 to February 29th, 2020.
The CARES Act uses this number to divide the number of full-time employees you employ during the “covered period” to determine your forgiveness reduction.
So if you chose February 15, 2019 - June 30, 2019 as your “baseline,” at which time you had six employees (for example’s sake)...
You would need to have an average of at least six employees on payroll during the “covered period” for which you’re seeking forgiveness to avoid forgiveness reduction.
Confused yet? Don’t beat yourself up — we were too. It took a long time to wrap our minds around this portion of the bill.
The important thing to keep in mind while your brain feels like it’s melting is: The purpose of Paycheck Protection loans is to keep people employed by small businesses.
As long as you employ more people during the “covered period” (which when speaking about Loan Forgiveness in Section 1106 of the CARES Act is defined as eight weeks beginning on the date of your loan origination — page 41), than you did during your chosen “baseline” period (Feb. 15, 2019 - June 30, 2019 -OR- Jan. 1, 2020 - Feb. 29, 2020), your loan forgiveness will not be reduced.
But if you choose not to employ the same number of people during your 8-week forgiveness period that you previously employed in your chosen “baseline” period (explained above), your loan forgiveness WILL be reduced.
For example, if you previously employed five people during the “baseline” period you chose, but you only employed three people during the 8-week period that qualifies for forgiveness, you’d calculate your reduction using the following formula:
$[Your total PPP forgiveness dollar amount] x (your average number of full-time employees from during your 8-week “covered period” ÷ your “baseline” number of full-time employees chosen from above).
In other words…
$[Your total PPP forgiveness dollar amount] x (3 ÷ 5)
Which gives you...
$[Your total PPP forgiveness dollar amount] x 0.6 = Your reduced forgiveness dollar amount
Unfortunately that’s as clear as we’re able to make it. Please re-read this section slowly if it still doesn’t make sense. It’s a complex matter that can’t be simplified further.
NOTE: Many sources online discussing forgiveness are referencing the “covered period” for calculating forgiveness as the same timeframe as defined in Sec. 1102 (February 15, 2020 - June 30th, 2020). It is our opinion that this is incorrect.
The “covered period” defined specifically pertaining to forgiveness (Sec. 1106) is only eight weeks from the date your loan originates (bottom of page 41) , NOT the time frame from Sec. 1102 speaking more broadly about the Paycheck Protection Program.
Do All SBA Loans Qualify for Loan Forgiveness Under the PPP?
No. There are still several types of SBA loans. Make sure you're applying for an SBA 7(a) loan specific to the CARES Act if you're planning to apply for forgiveness.
What’s the interest rate on non-forgiven expenses?
Interest on non-forgiven expenses will be one percent (Interim Final Rule).
Will I pay any interest if the loan is forgiven?
No. Interest to the lender for any forgiven expenses is paid by the federal government (page 44).
How long will I have to pay off any balance that is not forgiven?
A maximum of 2 years from the date you apply for loan forgiveness (Interim Final Rule).
What documentation will I need?
Update from the Interim Final Rule (page 6): "...submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099- MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount."
To apply for forgiveness:
- Payroll tax filings reported to the IRS
- State income, payroll, and unemployment insurance filings
- Documentation verifying payments on covered mortgage or lease obligations
- Personal certifications from an authorized recipient within the business that the documentation is correct and the funds requesting to be forgiven were used towards covered expenses
More details about what documentation will be required for forgiveness is available on page 50 of the CARES Act.
Scenario #1: You Haven't Yet Laid Off Any Employees
Let's say payroll for you and your employees is $50,000 per month. Your maximum loan amount would be $125,000 (2.5x your monthly payroll costs).
You've managed to not layoff any employees up to this point because you've been waiting to see what relief the government would provide.
You could apply for the loan as soon as they're made available without any need for collateral or other traditional SBA requirements and possibly receive funding as quickly as 1-2 weeks from your application date.
From the date your loan originates, all payroll for the next eight weeks qualifies for forgiveness, assuming you have not cut each employee's pay by more than 25% and they remain employed by you for all eight weeks after your loan origination date. Rent, utilities, and real estate mortgage interest during those eight weeks would also be forgivable.
Scenario #2: You've Already Made Furloughs or Layoffs, but You Choose to Hire Them Back
If you've already laid off or furloughed employees, all relief and forgiveness is still available to your business for every employee you rehire.
Say you couldn't afford the $50,000 monthly payroll outlined in Scenario #1 above, so you let 80% of your staff go, leaving only $10,000 in monthly payroll. It doesn't change your forgiveness qualification as long as you hire back your employees after your loan originates.
You'd apply for a maximum loan of 2.5x your original monthly payroll (prior to layoffs / furloughs), hire your employees back the day your loan originates, and all payroll expenses + rent + utilities + real estate mortgage interest would be forgivable during the eight weeks after your loan origination date (assuming the employees remain employed by you through the end of those eight weeks).
Scenario #3: You've Already Made Furloughs or Layoffs, but You Choose NOT to Hire Them Back
Any employee you keep employed or hire back at at least 75% of their regular payroll qualifies for eight weeks of payroll loan forgiveness on an employee-by-employee basis starting from the date of your loan origination.
Any employees you don't rehire, or any employees you terminate prior to the end of the 8-week “covered period” after your loan originates, will not qualify for forgiveness under the CARES Act.
Do You Have Other Questions About the Paycheck Protection Program (PPP)?
Pivotal Group is using all of the resources we can to help our members navigate the CARES Act, but we’re not SBA lenders or commercial loan experts.
Please ask your lender if you have any questions specific to your business.
Economic Injury Disaster Loans (EIDL)
Many doctors find themselves considering an EIDL right now instead of or in conjunction with a Paycheck Protection Program (PPP) loan.
It’s important to delineate the two, as we’ve seen a lot of information within the optometric community that is false or misleading according to what’s actually specified within the CARES Act (page 66, section 1110).
What is it?
EIDLs have been around for a long time, but they were expanded by the CARES Act to include all 50 states due to SARS-CoV-2’s negative impact on businesses across the United States.
How is it different from the PPP?
The main difference is that EIDL loans are not forgivable. EIDLs have a slightly broader definition of “allowable purpose” (page 69), a lower interest rate (3.75% vs. the PPP’s 4% maximum), and a maturity of up to 30 years.
What’s the $10,000 grant offered as part of the EIDL?
Borrowers applying for an EIDL can request an emergency grant of up to $10,000, which will be forgivable regardless of whether or not the borrower ultimately gets approved for the loan.
NOTE: Due to high demand, the SBA has limited the usual $10K grant to a maximum of $1,000 per employee with a maximum of $10,000.
Forgivable expenses for this grant are (pages 68-70):
- Providing sick leave to employees directly affected by COVID-19
- Maintaining payroll
- Meeting increased costs to obtain materials unavailable from your usual suppliers
- Making rent or mortgage payments
- Repaying obligations that cannot be met due to revenue losses
Can I apply for both an EIDL and the PPP?
Yes, but familiarize yourself with the caveats!
- You cannot apply for a PPP loan and an EIDL loan for the same expenses.
- You cannot have applied for or had a loan issued that is for the same purpose or duplicative amounts as your PPP loan (page 23)
- If you’ve already been issued an EIDL loan when PPP loans become available, it appears you’ll be able to refinance a portion of your EIDL loan into a forgivable PPP loan (pages 18-19)
This is a very complex topic that isn’t as directly addressed or clearly defined in the CARES Act as many other topics discussed in this guide. Contact a qualified SBA lender with these questions if you believe your business will require both a PPP loan and an EIDL.
Can I receive the grant for an EIDL ($10,000) and the maximum forgiveness from the PPP?
No — there is no “double dipping” here regardless of whether or not the expenses are duplicated. Any forgivable EIDL grant will be deducted from your PPP forgiveness availability (page 70).
Who should apply for an EIDL vs. who should apply for a PPP loan?
If you absolutely NEED funds immediately, you should apply for an EIDL as soon as possible.
OR… if you have expenses other than what are allowed under the PPP, an EIDL may be a better fit.
You should be able to receive your $10,000 emergency grant within three business days of your application being accepted, and you should be able to refinance a portion of your EIDL into your PPP loan’s covered expenses (double-check this with your SBA lender). This recommendation assumes that you need funding immediately, and that you’re applying for an EIDL before PPP loans are available.
Once PPP loans become available, unless you absolutely NEED funds immediately (rather than waiting an anticipated 1-2 weeks for PPP loan approval & funding), it’s our impression that you should wait for PPP loan application and approval to not jeopardize your ability to get approved for the forgivable PPP loan.
Your SBA lender may have more applicable, customized guidance based on your business’ current financial situation. Talk to an SBA lender about your options if needing to combine a PPP loan and an EIDL. Only an SBA lender will be able to provide complete, accurate information specific to your business RE: combining the PPP & EIDLs.
How you handle a layoff will determine whether employees ultimately come back to work for you long-term after this pandemic.
We believe an essential component of this is familiarizing yourself with your state’s unemployment benefits, as well as the additional benefits made available at the federal level due to the CARES Act, so that you can ease your employee’s mind when furloughing or laying them off. Otherwise they’re going to experience significantly more fear than is necessary and, ultimately, they may not claim all of the benefits available to them right now as they attempt to provide for their loved ones.
We are still evaluating and updating this section based on the language within the CARES Act. Please check back for more information in the coming days.
For now, here’s everything we know.
What factors to consider when laying off employees
We know how challenging it is to layoff employees, particularly members of the team who feel more like family than team members. Please know that we don’t aim to come across as callous. We just want to guide you to the best of our ability when navigating these difficult decisions.
The first thing to evaluate before laying anyone off is: Can I easily replace them when this blows over? If the answer is “yes,” it’s not as challenging of a decision. If the answer is “no,” you should seriously consider doing whatever it takes (including lowering your personal payroll, if possible) to keep that employee on-board during this time. The job marketplace will be flooded with talent after we recover from the pandemic, and your best talent might get hired out from under you if you don’t take care of them now.
Another major consideration is insurance coverage (if you offer it). Your employees may qualify for more unemployment than in recorded U.S. history, but that’s not going to keep them insured. Offering to continue paying an employee’s insurance premiums right now, even if you’re saving yourself the cost of their salary, is an excellent way to protect your relationship and retain loyalty. This won’t be possible if you lay your employee off — this would require a furlough or other “leave of absence.” Policies on furloughed employees vary widely between insurers right now. Speak to your broker or insurer to discuss your options.
Choosing whether or not to bring back employees you’ve already laid off
Your first consideration should be, “Will my PPP loan forgiveness be reduced if I don’t bring my employee(s) back?” The CARES Act was designed to make you consider this above all else. In most instances, your PPP loan forgiveness WILL be reduced if you don’t rehire employees you laid off since the SARS-CoV-2 pandemic shutdown our economy. We discuss this complex topic extensively earlier in this guide.
If you’ve recently expanded your team and not all payroll is covered by the PPP loan as a result, are you willing to endure negative cashflow until we’re back to “business as usual” or possibly even take on debt to retain those new team members?
If you do decide to bring employees back, notify them in advance rather than the day your PPP loan funds. Be clear on what you expect from them regarding hours, pay rate (can’t be reduced by more than 25% if you want full PPP forgiveness), how soon you expect them to come back to work, etc.
If business has slowed dramatically and they’re not occupied with their normal day-to-day tasks, define and communicate new job responsibilities rather than just paying them for the sake of receiving full PPP loan forgiveness. This is the perfect time to make improvements, conduct analyses, undertake marketing initiatives, and more that you don’t usually have time for between seeing patients.
Finally, make sure you reconcile any decision you make about rehiring employees with your local state and federal employment laws.
Remember: you aren’t required to hire back the identical employee(s) you laid off. You just need the same number of full-time employees during the “covered period” as you had previously, and they need to be paid at least 75% as much as your average payroll costs for the 12-month period prior to receiving your loan.
Can I lay myself (the business owner) off?
There’s a lot of talk about this within the small business community right now. We’re not 100% comfortable advising on this particular point — this is a question much better posed to your accountant and/or attorney. We’ll do our best to point you in the right direction.
It appears that it should be possible in at least some instances: visit this helpful link.
One final caution we’d give before taking an extreme measure like laying yourself off and collecting unemployment as the business owner:
Even if it turns out to be possible, but your business continues creating any level of income, that could put you in a very precarious situation between the federally-operated Unemployment Office and the IRS.
Tread carefully here.
Expanded unemployment benefits as part of the CARES Act
The CARES Act expands unemployment benefits by up to $600 per week (if the applicant’s prior income qualifies them for it, of course; they’re not just adding $600/week to every claim).
This is paid for by the federal government (not the previous employer) and is in addition to whatever unemployment benefits are available to applicants at the state level.
Standard state-by-state maximum weekly benefit and maximum duration can be found here. Some of these have been expanded at the state level, but at a bare minimum, all maximum durations are now at least 39 weeks thanks to the CARES Act.
Loosened requirements as part of the CARES Act
The government acknowledges that hardly anyone is hiring during this economic crisis, and has therefore temporarily removed the requirement to apply to multiple jobs each week while receiving unemployment benefits.
Self-employed individuals who were put out of business can also now temporarily qualify for unemployment benefits.
Contract workers and employees whose hours have been reduced also now qualify for unemployment benefits
Expedited relief (no waiting period) as part of the CARES Act
There is currently no waiting period to be approved for unemployment. Benefits will be paid retroactively to the date of unemployment, NOT determined by the date the application is approved.
Taking care of and providing guidance to employees you need to layoff
Even when handled as delicately as possible, laying employees off risks permanent damage to your relationship. This is acceptable for some positions, but especially for top-level talent whose contributions are critical to your business’ overall performance, every care should be taken to mitigate this risk.
Be transparent with them. Let them know this was completely unavoidable and that you wouldn’t be making this difficult decision if there were any other alternative without risking bankruptcy.
We recommend familiarizing yourself with your particular state’s unemployment benefits so that you can provide your employees with the following information:
- Where to apply for unemployment
- Possible wait times they might anticipate between layoff/furlough and their first check
- What’s covered (retroactive pay, up to $600 additionally from the federal level, etc.)
We also recommend that you give them contact information for someone who can help them secure health insurance, or at the very least, referring them to the Health Insurance Marketplace (if your business provided it and no longer will).
How well you preserve your loyalty with employee(s) whom you’re forced to let go will directly correlate to how thoughtfully you handle this conversation and how much unemployment guidance you provide.
Show up for them here if you want them to show up for you after the pandemic has passed.
Closing Thoughts & Advice for These Trying Times
We hope this guide has provided all of the insight you need to survive the SARS-CoV-2 pandemic.
Pivotal Group is dedicated to putting independent optometrists back in control of the optometry & optical industry, so we’ll continue doing everything we possibly can to help you make it through this. We believe this crisis is showing doctors VERY clearly who their true “partners” are, and we’ll fight every day to remain at the top of that list.
We will continue to update this guide, but for now, here are some closing thoughts.
What to be aware & cautious of when applying for any loan
Business owners are panicked and this relief is rolling out quickly, which will always escalate the risk of predatory lenders.
Be able to calculate your own payroll and forgiveness costs rather than depending on a frantic and overworked loan officer to get it right.
Pay close attention, make sure you’re getting the loan you’re requesting (not something else, particularly something that wouldn’t qualify you for forgiveness), and only work with a lender you trust.
Even if you’re well-versed in everything discussed within this guide, we strongly recommend never borrowing money you’re not in a position to be able to pay back in the future should forgiveness not be granted or other circumstances result in you being responsible for the full loan amount.
Keep strong and detailed documentation every step of the way. Save emails, keep track of who you’re speaking to throughout the loan process and what they told you, record dates and names of everyone you’re in contact with throughout the process.
How to most responsibly use the time you’ve received from this stimulus package
Regardless of what relief you receive, we encourage you to NOT treat the coming weeks as time off or “business as usual.”
Start planning for another 2-4 months (or more) without normal cashflow after your eight weeks of PPP forgiveness are depleted. We don’t know for sure how long this is going to last, and it’s distinctly possible that you’ll need other ways to bring in revenue after your PPP loan forgiveness runs out.
Take this time to tackle topics critical to your profitability, but that you never seem to have time for normally:
- Look at your past expenses — which can be eliminated or dramatically reduced?
- Do an audit — search for parts of your business that may have underperformed.
- Reevaluate significant profit points for all opticals like edging in-house, using a different lab, or overhauling your go-to frame suppliers. Dramatically boosting profits on all of these fronts will bring MUCH healthier profits into a starved optical after we’re back to business as usual, and help insulate you from future catastrophic economic downturns.
- Employee training: what have they done differently than you would prefer in the past, but didn’t have the time to perfect or correct?
- Increase visibility: what can you do to increase your visibility right now (and for the future) when all of your competitors have put a hold on advertising and marketing?
Looking forward to tremendous opportunity in the very near future
We are experiencing the most dramatic “herd thinning” event in most of our lifetimes. This has been and will continue to be tough to survive.
The business owners who find a way to weather this downturn will have opportunities that were previously out of reach.
Talent will be available that was previously locked down and loyal to their previous employer for years.
Previously greedy suppliers and parasitic “partners” will be more motivated than ever before to retain your business, giving you a huge leg-up on negotiations.
If you’ve followed our advice above, you will have dramatically optimized your business and improved your profit margins, boosting your profit margins by at least five-to-six-figures each year.
This is an awful event whose gravity cannot possibly be overstated; however, it’s also the biggest opportunity most independent optometrists will have ever seen.
Handle it diligently, plan your steps carefully, and use this time wisely. As a Pivotal Group member, nobody in this industry is better equipped than YOU to capitalize on this opportunity.
You are not alone, and we will support you every way we can
We are still serving and supporting members every way we can.
If you’re a Pivotal Group member and we can help you in ANY way as you adapt and plan for this new optometric landscape, please don’t hesitate to reach out.
Now more than ever, no group in this industry is better poised to help you FIGHT BACK and retake control of this industry than Pivotal.
If you’re not currently a Pivotal Group member, you can claim full membership benefits absolutely free-of-charge (no strings attached) at https://www.TryPivotal.com/.
Revision History for this Guide
Monday, April 20, 2020:
- Includes details about Congress' anticipated additional $250BN in PPP funding
- Updated the EIDL laon to reflect the SBA's $1,000 per employee maxmium
- Expanded "Where to apply" section with tips on maximizing your chances at receiving PPP funding
Tuesday, April 7, 2020:
- Updated to reflect the Department of Treasury's amendments to Sec. 1102 (Paycheck Protection Program) and Sec. 1106 (Loan Forgiveness) of the CARES Act, per their Interim Final Rule. This most directly impacted PPP loans' deferment (six months), interest rate (1%), term (two years), and documentation required (shared above).
Thursday, April 2, 2020:
- Substantial additions were made to the Paycheck Protection Program (PPP) section, providing significantly more depth and clarity to qualifications and forgiveness
- Official partner secured for Pivotal Group members seeking a forgivable PPP loan.
- Citations were added back to the original CARES Act wherever helpful and particularly where there seems to be a lot of confusion within the optometric community
- EIDL, Unemployment, and Additional Advice sections added
- All Pivotal Group members were immediately notified via email about these updates.
Friday, March 27, 2020:
- Original “Guide to Navigating the CARES Act” emailed to Pivotal Group members giving a high-level overview of the Paycheck Protection Program (PPP).