COVID-19 Preparation - Final Questions for You & Your Practice

COVID-19 Preparation - Financial Questions for You & Your Practice:

TMA Medical Banking is poised to be a consultative resource and to provide direct assistance to financially sound medical practices that are experiencing short-term cash flow issues directly related to the spread of the COVID-19 virus.

  • Do you anticipate any short-term working capital needs?
  • If so, what is the estimated amount and timeframe?

Now is the time to reach out to your financial institution, be it another Bank, the SBA (Small Business Administration), or TMA Medical Banking.  Many of you are already juggling staff shortages, appointment cancellations, local/state mandated closures, and supply chain delays. TMA Medical Banking is here to be a resource to you as a TMA member.

Below are questions we are asking our Practice customers in assisting them with preparation and resources to combat the economic effects of COVID-19. No matter your financial institution partner, proactive planning will serve you well.


Does your Practice’s “Preparedness Plan” include an outline of the following considerations?

- Addressing cash flow issues

- Expenses

- Staffing

- Capital expenditures

- Vendors

- Payers

- Customers

- Communication

When did you begin implementation of your plan and what are your plan’s next phases? Have you needed to alter the plan?

To what degree have you reduced staff/hours/services? Can you function with a skeleton crew? 

What job functions in your practice are being conducted remotely?


What changes have you implemented in the short-term to minimize your fixed overhead?

  • Have you reached out to your landlord about flexibility in your rent?
  • Have your vendors offered flexibility in payments to them?

With current and projected revenue interruptions, what is your cash flow break-even threshold?

What level of reserves do you have?  How long will those reserves last?

  • Have you, or do you expect to experience longer than normal times for claims to be paid?
  • Have you prioritized collections of accounts receivable (potentially considering inducements to expedite payment)?

Do you have any sort of Business Overhead Expense Insurance policy? What has your Agent/Carrier stated as the requirements for drawing off of the Policy?


What proactive steps have you taken to ensure access to needed supplies?

What supplier concentrations do you have? Will supplies have potential shipping interruptions?

What are your normal Inventory turn days?  What happens if those days are increased by 25% or decreased by 25%?

Are there any alternative suppliers which may provide better terms (or leverage for negotiating with current suppliers)?


We are advising clients to document the impact they are experiencing or expect to experience as a result of COVID-19.  Activities such as revenue monitoring, loss of business or contracts, and other financial related conditions should be memorialized.  Specifically for the SBA related programs, we encourage you to gather monthly payroll records in terms of dollars and number of employees, rent/mortgage information, utilities, etc. as certain expenses may have forgivable provisions in some of the proposed legislation.  All of this homework will help expedite your own process of determining the best source of funding. 


** Note the following is a summary of the Baker Donelson article linked here: Baker Donelson: CARES Act: Understanding SBA Loan Programs to Determine Eligibility and Best Fit for Your Company) **

Economic Injury Disaster Loan Program:

The CARES Act made several changes to the Economic Injury Disaster Loan (EIDL) Program under Section 7(b) of the Small Business Act.

  • Apply online at: (there is no cost to apply)
  • Disaster customer service can be reached at: 1-800-659-2955 or
  • EIDL Loans are available to small businesses.
  • Up to $2 million @ 3.75% for up to 30 years (to be used for fixed debts, payroll, A/P, and other bills that could have been paid had the disaster not occurred – not intended to replace lost sales).
  • Loans over $200,000 must be guaranteed by any owner having a 20 percent or greater interest in the applicant (the CARES Act removed the requirement for personal guarantees on loans under $200,000).
  • The SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available.
  • First payment deferred for one year from signing of Note.

Paycheck Protection Program:

The Paycheck Protection Program authorized by the CARES Act makes loans of up to $10 million available to certain qualified small businesses (in general, under 500 employees – see other stipulations). These loans are intended to be forgivable if the borrower maintains employees and otherwise complies with the CARES Act. Congress has appropriated $349 billion for this program.

  • The maximum amount of the loan is set by formula (average monthly payroll prior to the COVID-19 pandemic times 2.5 plus the amount of any other debt approved for refinancing, including any debt incurred as a result of COVID-19 under the EIDL Program), subject to a maximum of $10 million.
  • Maximum interest rate of 4 percent per annum with payments deferred for 6-12 months. Guarantee fees waived.
  • Loans are non-recourse to the borrower, do not require collateral, and have no prepayment penalties.
  • The applicant is required to certify that current uncertain economic times make the loan request necessary to support ongoing operations; funds will be used to keep workers and make payroll, mortgage payments, lease payments and utility payments; and applicant does not already have an application pending for other payroll assistance under the CARES Act.
  • Loan Forgiveness Provisions: Amount forgiven is not considered taxable income to the borrower. The loan forgiveness will equal the amount spent by the borrower in the eight-week period after the loan origination date on the following items (not to exceed the original principal amount of the loan):
    • Payroll costs (not to exceed $100,000 of annualized compensation per employee), payments of interest on any mortgage loan, rent, & utilities (that began before 2/15/20).
    • The amount forgiven will be reduced proportionally by any reduction in the number of employees retained as compared to the prior year. Any amount outstanding after considering the amount forgiven will be repayable over a term not to exceed 10 years.
    • The borrower must apply to the lender for loan forgiveness with supporting documentation.

TMA Medical Banking line of credit:

  • The Bank is eagerly awaiting details on how to best participate in the above-referenced SBA programs. We want you to have access to the most effective source of financing that materializes through this process.  As we await further guidelines on the implementation of the above SBA programs, we continue to entertain line of credit requests to provide working capital to cover shortfalls in fixed overhead expenses over the next six months due to losses of revenue related to COVID-19.
  • In order to consider your request TMA Medical Banking would need the following information, which often can be sent by your Accountant:
    • 2017-2019 financials (internally prepared 2019 financial statement acceptable if tax return has not been filed).
    • Business debt schedule & estimate of value of available collateral
    • 2020 projections with an estimation of COVID-19 impact on your practice.

The updated projections should include:

      • Various “what if” scenarios to forecast different activity levels
      • What are the cash pressure points? Identify the timing and amount of cash needed
      • Lay out a detailed projection to identify avoidable / deferrable disbursements and enable difficult decisions to be made on cast as early as possible
      • Consider all sources of cash, including non-operating sources
      • Review contractual obligations

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