As personal protective equipment cost rises and dental practices are implementing new safety systems, understanding how to financially succeed amid and after the pandemic has never been more important.
During a Becker's Dental + DSO Review Virtual Event in June, industry leaders discussed how dental practices can succeed financially under the current circumstances.
The speakers were:
● Chris Panebianco, chief marketing officer of Bankers Healthcare Group
● Mark Schmidt, CEO of Fund-Ex Solutions Group
● Jacob Corlyon, cofounder & CEO of Capital Collection Management
Key takeaways:
1. Banks and other lenders are tightening credit criteria and pulling back to limit risk exposure, Mr. Panebianco said. The rapid onset of the recession has been tumultuous, with 25 percent of U.S. cardholders either experiencing decreased credit limits or closed accounts in April, Mr. Panebianco explained. Chase and Wells Fargo have halted new applications altogether. However, there are still active lenders, and dentists should research specialty lenders who understand dental practices' unique aspects.
2. The Small Business Administration's flagship 7 (a) loan is making six months of payments for existing loans, as well as the first six months of payments on new loans taken out before Sept. 27, or while funds last, Mr. Schmidt explained. The program is designed to help lenders offer loan terms to small businesses that might stretch beyond normal loan policies by guaranteeing a portion of the loan if the borrower defaults. The program also offers longer repayment terms than a typical business loan would, with terms possibly up to 25 years if the loan includes real estate. SBA loans are also generally larger, which makes sense given the additional time investment. Because the SBA is standing behind part of the loan, documentation and the overall process may be more involved, Mr. Schmidt added.
3. Dental practices are more resilient than most businesses and ideally the majority of revenue will be delayed rather than lost, Mr. Corlyon said. However, 60 percent of practices were still reporting 50 percent or less of pre-pandemic incomes, according to an American Dental Association survey of nearly 5,700 dentists taken June 1. Practices lost revenue amid mandated closures, and the cost of PPE has increased as practices reopened. Economic recovery will inevitably be tied to employment and income, according to Mr. Corlyn. Dental practices can improve recovery and patient experience by standardizing reporting and documentation during the accounts receivable collection process. Practices should also use robust and convenient technology during patient admittance, at the time of service and after visit to boost patient engagement. Practices should develop and implement a standard internal process to streamline all insurance processes and therefore increase collection.
4. When dentists consider business or personal loans, they should ask about repayment terms, required collateral, effect on personal credit and the application process, Mr. Panebianco said. Loans can be used to rebuild a cash reserve and are a good way to save some extra money each month by consolidating higher-interest debt into a single payment, Mr. Panebianco said
5. Fund-Ex Solutions Group provided over $136 million in Payment Protection Program loans to nearly 1,200 small businesses, and CEO Mr. Schmidt noted some of the changes signed into law June 5. The eight-week forgiveness period to use PPP funds was extended to 24 weeks, or Dec. 31. The 75 percent payroll cost requirement was reduced to 60 percent. Even if borrowers aren't able to spend all of the loan on payroll expenses, they can still apply for partial forgiveness based on how much they were able to use for payroll. Practices now have until the end of the year to restore their workforce to pre-pandemic levels and the maturity date for any loan amounts is now five years instead of two.
Click on the respective links to learn more about Fund-Ex Solutions Group, Bankers Healthcare Group and Capital Collection Management. To watch the full panel, click here.