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ADA asks Treasury Department, Small Business Administration to clarify intent of interim rule

Association would like clear guidance on Economic Injury Disaster Loans, Paycheck Protection Program

April 05, 2020

By Jennifer Garvin

Washington — The Association continues to wait for clear guidance from the U.S. Department of Treasury and Small Business Administration on the best way to help dentists considering applying for Paycheck Protection Program 7(a) loans and Economic Injury Disaster Loans.

The ADA expressed “strong concerns” regarding an interim rule the Small Business Administration released April 2 pertaining to the Paycheck Protection Program, in an April 3 letter to Steven T. Mnuchin, secretary of the U.S. Department of the Treasury, and Jovita Carranza, administrator of the U.S. Small Business Administration.

“We are concerned for our small business dental practice owners that this interim final rule contradicts the congressional intent of the [Coronavirus Aid, Relief and Economic Security Act] on how the Paycheck Protection Program loans can be utilized alongside Economic Injury Disaster Loans,” wrote ADA President Chad P. Gehani and Executive Director Kathleen T. O’Loughlin.

In the letter, Drs. Gehani and O’Loughlin noted that the interim rule stated that only the borrowers who received funds for the Economic Injury Disaster Loans from the SBA Jan. 31-April 3 were eligible to apply for Paycheck Protection Program loans. To the ADA, this implies that any entity that received Economic Injury Disaster Loan funds after April 3 would be disqualified from applying for and receiving Payment Protection Program loans. The letter also expressed concern with how the interim rule seemed to narrow the applicability of Economic Injury Disaster Loan funds.

“We do not believe this is the intention of the law,” Drs. Gehani and O’Loughlin wrote.

The ADA is asking the Treasury Department and Small Business Administration to confirm whether they will be disallowing borrowers who receive Economic Injury Disaster Loan funds after April 3 from being able to apply for Paycheck Protection Program loans.

The ADA also told the Small Business Administration that if this is the intent of the interim rule that the agency should have made the “potential disqualification clear” to Economic Injury Disaster Loan applicants “before and during the loan application process.”

“Further, many [Economic Injury Disaster Loan] applicants are still awaiting funds they applied for days ago and are not likely to receive those [Economic Injury Disaster Loans] funds before April 3,” Drs. Gehani and O’Loughlin wrote.

“We strongly recommend that [the Small Business Administration] work with Treasury to change the interim rule to clearly indicate that entities can apply for both loans and that they are still eligible to apply for both even if [Economic Injury Disaster Loans] funds are received after April 3,” Drs. Gehani and O’Loughlin said. “This would ensure that [the Small Business Administration] and Treasury are following the congressional intent of the CARES Act, as is illustrated in the U.S. Senate Committee on Small Business and Entrepreneurship guide for small business owners. Not doing so will adversely impact hundreds of thousands, if not millions, of small businesses that followed the law with the intention of applying for both loans.”

The ADA also sent out an Issues Alert from Dr. Gehani on April 4 that went to dentists nationwide that said, “if this interim guidance stands, it would pose great harm to the vast majority of our dentist owners and other small businesses, who have applied for but have not received any [Economic Injury Disaster Loans] money by April 3.”

The Issues Alert contained a link to an ADA Legislative Action Alert that urged dentists to contact their legislators to ask them to contact Secretary Mnuchin and Administrator Carranza to ensure that the rules issued match the intent of the CARES Act. Those grassroots emails from dentists also included a copy of the Treasury and Small Business Administration letter.

Visit ADA.org/virus for the latest COVID-19 information.