COVID-19 Relief Resources for Veterinarians and Other Small Business Owners

There are a number of resources available to help veterinary practice owners and team members manage the financial burden of the coronavirus shut down.

If you’re a veterinary office employee whose schedule has been reduced or if you’ve been laid off or if you are a practice leader concerned about cash flow, payroll, and long-term business survival, here are some options for you to consider.

Hold Onto Cash

Check with your landlord, your mortgage company, the company that holds your car debt, your credit card companies, and all others to whom you owe money and see if you can have payments deferred to a later date. It’s very important that you take the initiative to start this conversation; many creditors are likely to remain silent on the topic until specifically asked. Also, be sure to check if you are actually putting your repayment schedule on hold or if you are still accruing charges, all of which will be due 3 months down the line. While you may need some wiggle room today, you may not want to emerge from this with 3 months or more of back-dated bills, so be sure to ask each of your creditors what your options are.

Apply For Aid Now

Don’t wait until you need assistance before applying. Some states have already run out of relief assistance after only a day or two of having the funds come available. Explore the resources here, determine if you are eligible or if you believe you will become eligible, and gather the information you will need to apply. Often times, these resources are dispersed on a first in/first out basis and once they’re gone, they’re gone. Having an application ready for submission may get you to the front of the line if more aid becomes available. If you are overwhelmed and don’t know what your options are, you’re in good company. Remember that many of the details regarding this aid are being figured out even as this article is being written, but the best sources of information on what aid is available will be from the Small Business Administration, the Small Business Development Centers, and your accountant. There are also other valuable resources listed at end of this article.

The CARES Act: An Overview of Coronavirus Benefits Approved By Congress

As part of the Coronavirus Aid Relief and Economic Security (CARES) Act that was signed into law in March of 2020, citizens and business owners are eligible for the following benefits and relief programs. Click on highlighted programs to jump to, or be taken to, pages that explain each in more detail.

Expanded Unemployment Insurance

Under CARES, Unemployment Insurance eligibility requirements have been relaxed. There are also increased benefits and extended benefits for 13 weeks supplied by the Feds once state resources run dry. Jump to more on unemployment.

Paycheck Protection Plan

The Paycheck Protection Plan is designed to help employers with fewer than 500 employees shoulder the expense of keeping everyone paid and employed. Business owners may have to have an established relationship with an SBA participating bank in order to apply, a fact that is already causing a good bit of consternation with small business owners who are feeling cheated if their existing bank is not SBA-affiliated. As of April 4th, 2020, a significant number of bank websites were swamped with applications, so the process to get aid could be stymied for many. Jump to Paycheck Protection Plan.

Recovery Rebate.

The Recovery Rebate is a stimulus check for Americans slated for postmark by April 6th, 2020. Single tax payers with an adjusted income of 75K or less will receive $1200.00. Married couple and heads of households have different income requirements and will be paid out higher amounts. Families with children will receive an additional $500.00 for every child. No need to do anything for this. If you have filed with the IRS in the past, the feds will figure it out. Read more about the Recovery Rebate and see a list of FAQs.

Pay Your Workers’ Student Debt

Businesses that pay for an employee’s student debt can subtract the payments made from their business’s taxable income. Students receiving the aid do not have to count the payments as income (up to $5250.00 annually) and will not be taxed on the payments made on their behalf. Other restrictions apply. Read more about this plan on the Student Loan Borrower Assistance webpage.

No Penalty on Retirement Account Withdrawals.

If you need to tap into your retirement, you may do so without incurring the early-withdrawal 10% penalty. You may also spread out the tax payments on the withdrawals over a three-year period and if you want to put the money back, you may do so without affecting your regular cap on contributions for that year. Read more on the waived retirement distribution penalties at Forbes.com.

50% Payroll Retention Tax Credit.

Businesses that have experienced more than a 50% loss in sales due to the pandemic can receive a tax credit on payroll taxes paid during the crisis. If you have fewer than 100 employees, the credit applies to all wages paid. Many more details omitted from this brief excerpt. Learn more about the Payroll Retention Tax Credit here.

Carry Over Net Operating Losses From Previous Years

This is way for businesses to maximize the deductions for which they qualify by allowing them to spread net operating losses for the past 3 tax years over the previous 5. Check with your tax preparer to see if this option can work for you.

Net Interest Deduction Increased

Before COVID-19, businesses could only deduct interest from their return that was not in excess of 30% of the tax return’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). Now, they can deduct up to 50%. This will increase a company’s liquidity and decrease some hesitations about borrowing money.

$458 Billion in Emergency Lending to Businesses, States and Cities

Some of this money will help fund your state and city’s plan to assist you in your recovery. The rest will go to large companies like airlines and other businesses that are vital to our national security.

$150 Billion to Assist States With Managing the Covid-19 outbreak

This is additional money allocated to states to help them battle the aftermath of the outbreak in their area. Currently there is some squabbling between states over how this is being distributed.

There are more details, but these are the one that I believe are most important in this forum. For a complete list of benefits included in the CARES Act, visit the Tax Foundation.

Apply For Unemployment

Even if you weren’t eligible for unemployment before, you may be eligible now. Google the unemployment office for your state and visit their webpage. They will likely have a very visible link to the current eligibility requirements for unemployment pay. Keep in mind that the unemployment rates are at record highs, so expect phone lines and websites to your state’s unemployment office to be crammed with callers and visitors. You may have the best luck getting up in the middle of the night to apply or calling precisely when the agency opens for business. If it takes you awhile to get your application placed, your benefits will be applied retroactively to the date of when your unemployment began. CNBC has a very detailed article on the topic.

Apply for the SBA Economic Injury Disaster Loan

Anyone who owns a small business should apply for a Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL). The site is loading quickly despite the heavy volume and the application process is fast. Make sure that you check the box that says, ‘Apply For An Immediate $10,000 Economic Injury Grant’ and to provide the SBA with your company’s bank name, account number, and routing number so that funds can be transferred immediately into your account. Currently it’s taking the SBA between 15-30 days to review applications and to return an email to the applicant, but representatives at the office told me that within 2-3 business days of reviewing the application, the $10K is transferred into your account. If you are later approved for the actual loan, the 10K will be deducted from whatever loan amount you are approved for, but if you are not approved, you can KEEP the 10K; it becomes a grant. Applications are processed first in/first out and loan funds arrive about 5 to 10 days after signing the loan documents. To apply, be sure to have you Employment Identification Number (EIN) and a copy of your 2018 or 2019 taxes which you will need for information on your business’s gross receipts, cost of goods sold, and administrative expenses.

Paycheck Protection Program (PPP) Loans

At the time of this writing, some states have opened up the doors for application to the Paycheck Protection Program (PPP) loans. These loans are dispersed through any SBA participating bank. The loans can be used to rehire currently laid off employees and to keep current employees working. To qualify, you must be able to prove you were in business on February 15th, 2020. Loan amounts can be approved for as high as 2.5 times your average monthly payroll and can include the cost of employee payroll taxes, benefits, rent, utilities and mortgage interest. Part of the loan may be forgiven if you keep your employees working for at least 90 days and payments are deferred for 6-12 months depending on the bank. It is possible to apply for the Paycheck Protection Loan, but the 10K grant will be deducted from the loan proceeds that you are scheduled to receive. Be mindful that at the time of this writing, there is some question as to whether the federal government will cover any losses to the bank if you default, so some banks may be more strict than others with approving these loans.

SBA Express Bridge Loan

Application for this loan is done through any SBA participating bank. This is a 25K loan with a 7-year term at 6.5% above-prime interest rate. Applicant must have an existing relationship with the lender. View the Express Bridge Loan Pilot Program Guide as a PDF.

Working Capital Access Loans

Most states are offering working capital loans to small businesses during the time of the crisis, but as I warn above, the funds for these assistance programs can dry up within days of becoming available and historically (during the 2008 recession), only about 1 in 5 applications were approved. Get started with looking for banks that may offer loans in your state by visiting the Economic Development Directory which lists resources available by state.

Upcoming Podcast On Managing Your Veterinary Practice Post-Covid-19

In cooperation with DVM360 and with the generous support of Nationwide Pet Insurance, we will be airing a live podcast on how to re-start your business in a post-COVID America. Release date will be sometime in April, though an official date has yet to be determined. Please stay connected with me on Facebook where I will be sure to announce the date once it is agreed upon.