Home News Calibrate Your PPP Spending to Your Reopening Ramp-up

Calibrate Your PPP Spending to Your Reopening Ramp-up

Consultant plays out scenario of treating PPP as a low-interest business loan

gary gerberBy Gary Gerber, OD, Chief Dream Officer, The Power Practice

Please read this before you spend another penny of your PPP money

Since time is of the essence and what I’m about to say may be advice that prevents your practice from going under, I’ll skip the typical article preamble about how the COVID pandemic has affected practices and what PPP stands for.  If you’re reading this, you already know. Instead, this article is so urgent that if you have PPP money sitting in your bank account, it’s something you must read now.

I spend the bulk of my time talking to doctors from all corners of the U.S. With round two of the PPP now well underway and more practices finally getting funded, I’ve been hearing a common sigh of relief related to, “Now I can bring back my staff!”

While it’s unquestionably been a stressful time waiting to get funded, being able to bring your staff back to work is the wrong reason to exhale. Not understanding why can quickly put your practice’s long-term viability at peril.

If there was a reason to feel hopeful about being funded, it should be that you now have a fighting change achieving long-term success. To do that, you need to quickly—as in now—recalibrate how you’re thinking about your PPP money.


If you now think, “How can I ensure I spend 75 percent of my PPP money on payroll to ensure it’s forgiven?” … you must immediately change that to

“How can I take this LOAN and use it as effectively and as long as possible in my practice?”

To help you with this recalibration, think about any new practice that opened for the first time in pre-COVID times.

The practice got a business loan. That loan was a fixed amount that had to last until the practice was self-sustaining and generated enough ongoing cash flow to remain open.  The focus of the doctor at that point was, “How will I use every last dollar most effectively to make sure I can ultimately have a sustainable business?” The practice opened with a small staff in the anticipation of a small initial amount of business. Yet, the major fixed expenses on opening day (for example rent, equipment leases, insurance) still needed to be paid in full.


Fast forward to now with your PPP check in your account. Assuming you’re able to reopen your practice, (if you’re not, and you are still going to pay your staff, I’ll never convince you not to, so you can stop reading now) you should view your reopening like the original grand opening above. In the above case, it made no sense to bring in a team of 10 staff people to take care of three patients per day.  If you wouldn’t do it then, don’t do it now.

Now, if more than three patients per day show up, bring back more of your staff. If those staff members have accepted other positions, hire new ones.  Is that more work than bringing back your own trained staff? Absolutely. Is it more fiscally responsible? Absolutely, times a thousand.

To put this in the simplest of terms, if you start paying all of your pre-COVID staff as soon as you get your PPP money, and your top-line business is anything less than 100 percent of what it was when you closed, you run the risk of quickly—very quickly—running out of money. Instead, if you put the PPP money aside and consider it a loan that you must pay back, you’ll work harder to conserve it and make it last as long as possible. For most of you reading this, that’s likely to be a better choice.

To give you some real numbers, a PPP loan of $100,000 with a 1 percent interest rate and a two-year payback (which is deferred for six months), will cost you an average of about $43.54/month in interest. That’s an incredibly miniscule price to pay by taking the long-term view on not only reopening your practice, but keeping it open.


Finally, to illustrate the main point one other way, consider these two scenarios with a $100,000 PPP loan.

1. You can divide it up among your staff members and rent for the next eight weeks and it will be forgiven—and gone forever. After that you’ll have to hope the practice volume in eight weeks is enough to sustain your practice. If not, it’s game over.

2. You can bring back enough staff to support your reopening volume. In eight weeks, you may still have (for example) $70,000 of the loan left to sustain you for an even longer period. In this case, it’s game on.


The content contained in this article is for informational purposes only.  The content is not intended to be a substitute for professional advice.  Reliance on any information provided in this article is solely at your own risk. 

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