In early May, the Trump administration announced that more than 2 million loans totaling $175 billion had been made to small businesses during the second round of the Paycheck Protection Program. Some veterinary practices are weathering the COVID-19 pandemic with the help of these loans.
Created by the Coronavirus Aid, Relief, and Economic Security Act to help struggling businesses during the pandemic, the PPP is a loan program designed to incentivize small businesses to keep their workers on the payroll.
When the initial $349 billion that Congress appropriated to the program ran out in April, lawmakers allocated an additional $310 billion to the PPP. Nearly 4 million loans, totaling over $500 billion, have been made since the program’s launch.
Dr. Ray Cahill, owner of SeaPort Veterinary Hospital in Gloucester, Massachusetts, applied and was approved for a PPP loan during the first round of funding in April. As a result, Dr. Cahill said, he was able to retain his 14 employees, including three veterinarians.
The most immediate impact of the pandemic and Massachusetts’ safety protocols was apparent in staffing at the hospital. A third of the staff members started working from home because they had underlying conditions that put them at higher risk of severe illness or needed to look after a sick family member.
We had to limit our capacity for what we could handle in the course of a day. The phone was still ringing, but we had to dial back according to what was reasonable for us to handle.
Dr. Ray Cahill, owner of SeaPort Veterinary Hospital in Gloucester, Massachusetts
“Going from 15 people running the hospital to 10 people was huge,” Dr. Cahill said. “We had to limit our capacity for what we could handle in the course of a day. The phone was still ringing, but we had to dial back according to what was reasonable for us to handle.”
The stress on the staff was also evident, so Dr. Cahill asked his employees not to talk about the coronavirus at work. He said: “That actually went a long way. Staff felt like work was a place where they could get away from the virus to some degree.”
As of early May, revenue at Dr. Cahill’s practice was down roughly 50%, not because the phone wasn’t ringing, but because of what the staff could reasonably handle, he said.
Dr. Dan Atlas also was approved for a PPP loan during the first round in April. He employs eight full-time staff members at his practice, Beaver Brook Pet Center and Pet Lodge in Evergreen, Colorado.
“Initially we were limiting clients to one in the building at a time, but by the end of the third week of March, we went to strict curbside pickup and drop-off,” Dr. Atlas said. The boarding facility constitutes roughly 20% of Dr. Cahill’s revenue, and the 30 runs were almost empty between late March and early May.
“I’d say we stayed pretty busy through March, but by the first half of April, our client visits dropped at least 50%,” he said. “Everybody was just concerned about going out.”
As a result, Dr. Atlas reduced hours of operation from six to five days a week and extended patient visit times from 30 minutes to an hour to allow time to manage the pets and for staff members to don protective gear.
As of early May, Dr. Atlas thought business might be picking up slightly, but he expected the coming months to be challenging for veterinary practices. “With the economy slowing and recession looming, I think we’re going to see people putting off pet care for the time being,” he said.
The Small Business Administration will forgive PPP loans if many of the employees of a business are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
On May 15, the SBA released the PPP Loan Forgiveness Application (PDF), which includes detailed instructions for borrowers and the calculation of PPP loan forgiveness. Release of the form comes as a welcome development for small businesses, many of which have already begun spending their PPP funds and have been following informal guidance while they awaited official SBA directives.
The form offers several components to reduce compliance burdens and simplify the process for borrowers, including the following:
- Borrowers have the option to pick and choose which nonpayroll costs to submit for forgiveness.
- Worksheets are provided to calculate total loan forgiveness amount. The loan forgiveness amount will not be reduced if an employer is unable to rehire workers who have rejected a good-faith written offer to return, were fired for cause, or parted voluntarily.
- Details for calculating average full-time–equivalent employees are available in the application, including options for determining the appropriate covered period.
- There is a safe harbor for borrowers that would not decrease forgiveness for FTE employees and salaries or wages that were reduced between February 15 and April 26 but restored by June 30.
The SBA says it will issue further regulations and guidance to assist borrowers as they complete their applications and to provide lenders with guidance on their responsibilities. Under the current law, PPP loan repayment is deferred for six months following the date of disbursement.