For most dental offices, the overhead is a serious concern during this time when the CDA is recommending office closure and the entire state of California is under the “shelter in place” order, making it increasingly difficult for patients to still come to your office even if your office is open on a limited basis.
RENT
Contact your landlord immediately to inquire about ways your rent payment can be suspended during this shutdown period, and perhaps extend your lease term by the similar period of rent suspension.
How sympathetic your landlord might be will depend on how leveraged they themselves might be, meaning if they have loan repayments that are also due and not suspended during this time. California governor has directed all evictions including commercial tenants to be halted during this time. It is important to keep in mind however that any non-payment of rent constitutes a material default under your lease that can cause you to lose many significant rights under your lease. In particular, it might trigger the inducement recapture clause that will obligate you to repay all tenant improvement allowance and free rents that might have offered to you at the signing of the lease. Skipping rent payments should not be done lightly.
This however is an excellent time to contact your business insurance companies and see what coverages you might have. Business interruption insurance typically covers a loss of income due to damage to property that is covered under the policy, as long as the cause of the property damage is a “covered cause of loss,” such as a fire or wind storm. While the COVID-19 pandemic and other pandemics are not typically listed as a “covered cause of loss”, certain specialized insurance policies and endorsements issued specifically in health care industries provide insurance coverage for losses caused by “communicable or infectious diseases” without requiring physical damage to insured property. Check your policies and see what coverages you might have and talk to your insurance agent.
For those of you who are leasing your office from a landlord who previously sold you the dental practice, those sellers have the good fortune of having sold their practices at the right time and have a responsibility to help their successors through this challenging time. Remind them that their actions will determine how they will be remembered by their patients and the community, and consult with your attorney on how to best negotiate the lease.
PRACTICE LOAN REPAYMENT
Many dental lenders and SBA lenders I have talked to informed me that their banks are offering unsecured lines of credit as well as loan deferments during this time.
Please contact your lenders immediately and see what relief options you might have. I will also be happy to connect you with the lenders I know and recommend.
STUDENT LOAN REPAYMENT
If you have outstanding federal student loans, you can elect to suspend payments for a period of at least 60 days without accruing interest. On March 13, interest rates were automatically set to 0% for all borrowers with federally-held student loans, and all federal student loan servicers have been ordered to grant administrative forbearance to any federal student loan borrower who requests for the relief.
To request a forbearance, please call or email your federal student loan servicer to officially enroll. Unlike typical forbearance requests, you will not be required to substantiate job loss or economic hardship to be granted the forbearance.
It’s important to still contact your federal loan servicer to coordinate a repayment plan, as payments will resume once the COVID-19 emergency is over.
As always, our offices are available for any questions or concerns you might have. We are here to support you during this challenging time.