Finance32: Dental School’s Missing Curriculum
Finance32: Dental School’s Missing Curriculum
Great clinical skills simply are not enough for dentists to achieve financial success. Let Buckingham Strategic Wealth's Practice Integration Advisors share what else you need to know to realize your lifetime goals and obtain financial peace of mind.
Buckingham Strategic Wealth

Should You Pay Back Your EIDL?

Should You Pay Back Your EIDL?

8/11/2021 2:00:00 PM   |   Comments: 0   |   Views: 23

Katie Collins, a Practice Integration Advisor with Buckingham Strategic Wealth, helps dentists order their financial lives and reach financial peace of mind so they can better focus on what truly brings them joy.

In the summer/fall of 2020, the Economic Injury Disaster Loan (EIDL) was one of the federal pandemic relief monies available to small businesses. Unlike a Paycheck Protection Program (PPP) loan or the EIDL grant, it can’t be forgiven and must be paid back. With an EIDL, there are no payments for 12 months, but interest accrues during that time at a rate of 3.75%. Once payments start, the loan would be amortized over 30 years with a fixed rate of 3.75%.

When this loan became available, many practice owners were just coming off government-mandated shutdowns and still facing some unknowns regarding the pandemic and their practices. Dentists could take advantage of the EIDL as a means to help with certain cash flow items or act as reserves while they got back on their feet. Best case, these dentists wouldn’t need the money and it would simply cost them some accrued interest to have that cushion available to them.

With vaccination numbers continuing to tick up, perhaps you are starting to feel a bit more secure in your practice. As a result, we’re starting to hear questions about what practice owners should do with their EIDLs.

If your production has rebounded and you feel comfortable that you’re able to meet the expenses of your practice, then you may want to talk with your financial advisor and/or accountant about paying back the loan. If you choose to pay it back, you’ll owe the interest accrued from the date you received the loan until the date you paid it back.

If you do pay back the EIDL, you will most likely receive an email from the SBA regarding the lien that was placed against your practice for the loan. You may then be responsible for filling out a UCC3 Financing Statement Amendment with your state to release the lien. The email generally will provide you with the information you’ll need to get this done. Working on this relatively soon after receiving the email is a good idea, because you don’t want to forget about a lien like this until it crops up again when it’s time to sell your practice.

If your practice hasn’t quite rebounded or you feel like your cash is still tight, then consider hanging onto the loan for the time being. Worst case, your 12 months expires and you need to start making monthly payments. If the loan helped you get back on track after being shut down, then it seems like a worthwhile expense.

In our next post, my colleague, Tom Bodin, will discuss his thoughts on how best to understand current dental practice valuation methods. As always, if there are specific topics you’d like us to tackle, please send us an email!

Would you like us to speak to your study club? Our Practice Integration Wealth Management team is pleased to offer live, interactive presentations to your colleagues. We can tailor our presentations to fit your content and time requirements and deliver them via an online format. Along with a question-and-answer period, we offer all attendees the opportunity to meet with us individually should they wish to ask questions more specific to their own circumstances. We can also arrange to have your study club’s presentation earn ADA CERP credits for attendees. Contact me for more information.

Buckingham Strategic Wealth is an ADA CERP Recognized Provider. ADA CERP is a service of the American Dental Association to assist dental professionals in identifying quality providers of continuing dental education. ADA CERP does not approve or endorse individual courses or instructors, nor does it imply acceptance of credit hours by boards of dentistry. The information provided is for educational purposes only and should not be construed as specific financial, accounting, or tax advice. Individuals should speak with qualified professionals based on their unique circumstances. IRN-21-2259

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