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SBA Loan if I still make enough to cover payroll?

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  • SBA Loan if I still make enough to cover payroll?

    I set my w2 income as $180k/year. My medical assistants make $160k/year combined. Biller and sub-contractors make about $120k. Rent 60k. Various insurance $15k. Supplies $10k. Car lease for business use $15k. When you add up everything, total costs to pay me, employees, contractors and expenses probably $550-600k. Assume that with less office work, I pay biller less, sub-contractors less, supplies less etc and total new overhead is $500k. I was previously generating $900k/yr in collections but think I can still generate $500k/yr this year by working more in hospital as office work decreases.

    If I now generate $500k collections in 2020, would there be any loan for me to apply to since I'm basically not "losing" money. I'd just not have enough for additional profits/distributions?

  • #2
    If you don't need it, then what is the possible benefit? Sounds like a negative after factoring in the paperwork.
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      Originally posted by Cubicle View Post
      If you don't need it, then what is the possible benefit? Sounds like a negative after factoring in the paperwork.
      It’s a 0.5% loan with payments deferred 6 months. Worst case scenario nothing is forgiven and you pay it all back.

      Once you know your average monthly payroll cost the paperwork is literally 3 minutes. Counting the 2 minutes it takes to look up the business tax ID.

      use the proceeds for payroll and it should be forgiven. As of now there is not a requirement to demonstrate true need with revenue numbers etc. Only a good faith certification that:

      “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.
      The funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments”

      https://home.treasury.gov/system/fil...30-2020-v3.pdf

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      • #4
        I would use this less busy time to really look at your overhead. Start generating reports in Quicken or some other software and figure out where the money goes. Do you need to lease cars? Before I retired I constantly did this to understand the cash flow. Managing cash flow is essential to the survival of a small practice. Learn to do it yourself.

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        • #5
          Using your payroll numbers, you could qualify for ~$50,000. It will almost certainly be higher when you add in the payroll taxes and retirement benefits paid by the employer, and depending if any of those subcontractors count towards your payroll.

          If you keep paying everybody, pay rent, pay utilities, etc, then you will likely to be eligible to have the entire $50,000+ forgiven. Your business has slowed to the point that you expect the business to make $400,000 less this year. I'd say that is a substantial disruption. If it's not forgiven, then you get to hold on to somebody else's money for 6 months interest free, with two years to pay it back at 0.5% interest. Why wouldn't you take the loan?

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