The Most Effective Way to Spend Your PPP Loan

By Gary Gerber, OD

May 7, 2020

Please read this before you spend another penny of your Paycheck Protection Program (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. 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.

It’s About More Than Rehiring Staff
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’s 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?”

Think Like a New Practice Owner
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.

Pace Yourself in Rehiring
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.

Loan Calculator

Click HERE for a complimentary loan calculator that will help you determine your monthly payment. For example, using this calculator, you would see that  on a $70,000 loan at 1 percent interest that has to be paid back in two years, the monthly payment would be $2,947.15.–ROB Editors

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.

Remember, This Is a Loan You Will Have to Pay Back
To give you some real numbers, a PPP loan of $100,000 with a 1 percent interest rate and a two-year pay back (which is deferred for six months), will cost you an average of about $43.54/month in interest. That’s an incredibly minuscule 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.

Gary Gerber, OD, is Chief Myopia Reduction Officer for Treehouse Eyes. He also is the founder of The Power Practice and hosts the weekly radio show The Power Hour. Contact:



Editor’s note: 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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