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Loan forgiveness: What dentists need to know

Dental CPA answers questions on small business loans, Employee Retention Tax Credit

August 04, 2021

By Jennifer Garvin

Photo of Allen Schiff CPA
Mr. Schiff

For dentists who received first draw Paycheck Protection Program loans, the deadline to apply for loan forgiveness could be on the horizon. In this Q&A, Allen Schiff, president of the Academy of Dental Certified Public Accountants, addresses common questions ADA members have had about Small Business Administration loans taken during the pandemic. The ADA is encouraging dentists who have questions about their loans to contact their lenders.

Question: What is the current status of Small Business Administration loans available for COVID relief?

Answer: The deadline to apply for the Paycheck Protection Program, or PPP, was May 31. Economic Injury Disaster Loans are still available through Dec. 31, but these loans are not forgivable, and must be paid back with interest. The Small Business Administration increased the limit allowance for Economic Injury Disaster Loans from $150,000 to $500,000 in April. This increase applies to both new and existing loans, so borrowers who received a loan before the maximum was increased may submit a request for an increase. The Small Business Administration should also be reaching out to borrowers directly with details about how to request an increase.

Q: For those dentists who received PPP loans, what are the deadlines for applying for loan forgiveness?

A: The deadline to apply for loan forgiveness for the first draw of PPP loans is now. For example, is you received your first draw PPP Loan on May 1, 2020, and you are using the 24-week period, that period ended on Oct. 15, 2020. You would then count 10 months from that date, which would put you at Aug. 15, 2021. Dentists can apply any time before their deadline, but they should check with their lender to confirm such. Forgiveness deadlines for second draw loans will be 10 months after the borrowers’ covered period started, just like it is stated above. The Small Business Administration recently launched a streamlined application portal that will allow borrowers with PPP loans of $150,000 or less to apply for forgiveness directly through the agency. This may simplify the forgiveness process for many PPP borrowers given that the vast majority received less than $150,000. By submitting an application directly with the Small Business Administration rather than with their PPP lenders, borrowers may be able to avoid delays or additional paperwork. The new portal began accepting applications on Aug. 4; however, lenders will need to opt into to allow their PPP borrowers to utilize the portal. The portal can be found on the SBA website.

Q: Should dentists take the Employee Retention Tax Credit?

A: Many ADA members are likely eligible for the Employee Retention Tax Credit, but it’s complicated and really requires individualized financial discussions with an accountant or advisor to determine eligibility. For a more detailed discussion of this tax credit, please look at this previous Q&A in ADA News. At the time of this writing, the ADCPA has completed 1,766 Dental ERTC Applications, which resulted in ERTC Tax Credits in the amount of $64,220,000, or approximately $36,000 per dental practice. This is great news to the dental profession, for it creates additional working capital for dental practices impacted by the pandemic. The ADA’s involvement with the Congress, with respect to the ERTC, makes it so much easier for ADCPA members to file the ERTC credits on their clients’ behalf.    

Note: The information in this piece is not intended to be, nor should it be construed as, tax, accounting or legal advice. Readers are urged to consult a qualified professional when seeking such advice. The ADA makes no endorsement of the above advice, nor of any website or organization mentioned in the above piece.