Private Practice Startup Podcast

Episode 180: The CARES Act: Financial Help for Therapists During COVID-19

Hosts: Dr. Kate Campbell & Katie Lemieux
Guest: Jenny Shadmieller, LMFT & CPA
Date: April 4, 2020

Episode Overview

This special episode dives deep into the CARES Act and its specific financial relief options for therapists and private practice owners affected by COVID-19. Featuring Jenny Shadmieller, a unique expert with dual credentials as an LMFT and CPA, the discussion addresses confusion about eligibility, application processes, and strategic use of relief funds—focusing on clarity for therapists seeking to stay afloat during unprecedented times. The hosts facilitate a Q&A-driven, practical guide for navigating unemployment, grants, and loan options.

Key Discussion Points & Insights

1. The CARES Act—Context and Key Options

• Impact Recognition: The pandemic has forced rapid changes and significant income loss for many therapists, especially as clients drop off or therapists transition to telehealth.
• Mindset Shifts: Jenny repeatedly encourages listeners to "be kind to yourself" when making tough financial decisions in an environment filled with stress and uncertainty ([03:52]).

2. Help Available & Eligibility

• Forms of Business: All business structures (sole proprietor, LLC, S-Corp, C-Corp, partnerships) can benefit. The key distinction is between employees and independent contractors (ICs).
  • ICs are not employees: "Your independent contractors are business owners just like you, which means they can take advantage of these programs as easily. Don’t take care of them financially—they need to do that themselves." (Jenny, [03:52])
• Three Main Relief Routes Discussed:
  1. Unemployment (including expanded benefits)
  2. Economic Injury Disaster Loans (EIDL, includes $10,000 grant)
  3. Paycheck Protection Program (PPP) Loans

3. Unemployment for Self-Employed & Therapists

• CARES Act Expansion: Self-employed, LLCs, and sole proprietors now qualify for unemployment, even if they haven't traditionally paid into the system ([13:06]).
  • Notable: "They expanded [unemployment] to self-employed individuals, which is crazy because we don’t pay into self-employment!" — Jenny ([13:06])
• Partial Unemployment: Varies by state; check your own state’s updates regularly ([15:58]).
• Action Steps:
  • Regularly check your state's unemployment website for rollout updates.
  • Eligibility for partial unemployment depends on whether your state offers it.

4. Economic Injury Disaster Loan (EIDL) & The $10,000 Advance/Grant

• Streamlined Process: Now a simple, three-page process. "You do NOT need to pay anyone to do this loan application for you." — Jenny ([17:48])
• Key Details:
  • Must have been in business as of January 31, 2020 ([24:06]).
  • Gross Revenue vs. Cost of Goods Sold: Therapists/providers almost always enter $0 for “cost of goods sold” ([22:20]).
  • The $10,000 advance is a grant: “Click the button for the advance! It should just say, 'Would you like $10,000, no questions asked?'” — Jenny ([29:02])
  • Use Advance for ANY business expense—no restrictions or required documentation ([68:02]).
• Eligibility: Types of business structure don't matter; even if you haven't formed an LLC, being a sole proprietor qualifies ([25:18]).

5. Paycheck Protection Program (PPP) Loans

• Who Applies: Available to businesses with or without employees; ICs can apply independently ([34:08]).
• Amount Calculation:
  • "You add up payroll cost, benefits, payroll taxes, and self-employment income for 2019—divide by 12 for the monthly average, then multiply by 2.5 to get your loan request." — Jenny ([40:28])
  • Cap: Payroll costs capped at $100K per employee ([40:28]).
• Usage Restrictions:
  • 75% must be spent on payroll; max 25% on rent, mortgage interest, utilities ([43:13]).
  • Documentation is essential for loan forgiveness.
• Loan Forgiveness: If you use funds as required and document everything, it’s forgiven; if not, only what was properly spent is forgiven and the remainder is repaid ([44:02], [46:33]).
  • “If I times at times point two, if I get a $25,000 loan, I have to use $18,750 on payroll costs or more, and the remainder can go to my rent.” — Jenny ([43:15])

6. Can You Apply for More than One Program?

• Yes, but with caveats: You may receive both EIDL and PPP, but can't “double-dip”—must use funds for different expenses and cannot get forgiveness for the same expenses twice ([57:11]).
  • “You can apply for both and convert the EIDL loan into a PPP loan... but you already got $10,000 forgiven, so they won’t forgive another $10,000 a second time.” — Jenny ([57:11])

7. Documentation and Organization

• Recommended: Keep a business bank account, profit and loss statements, clear payroll records, and all related documentation for any claims ([48:31]).
  • “No judgment if you’ve mixed business and personal; going forward, only business transactions in your business account!” — Jenny ([49:02])

Notable Quotes & Memorable Moments

• Self-Compassion in Crisis:
  • “We are not in a good environment to be making decisions, but we need to make them... If you can do that, you’re probably going to be able to live with your decision, but it’s just difficult right now.” — Jenny ([03:52])
• Receiving Government Help:
  • “This is too good to be true. When has the government given free stuff and really helped out?...But it’s actually in line with all the programs!” — Katie ([10:25]), Jenny ([11:21])
• Therapist Money Mindset:
  • “Some of them are like, ‘Well, maybe more people need this than me...’ If you’re having some stuff come up, this is a good time to begin to look at your own money conversations and your relationship to...clear that.” — Katie ([29:43])
• On Applying for Help:
  • “You don’t gain anything by including [independent contractors], and you don’t lose anything by not including them. Help your ICs fill out their own applications!” — Jenny ([51:55])
• On Loan Forgiveness:
  • “Forgivable means you don’t really have to pay it back... If you used it for college, grandma’s happy; if you bought a car, grandma wants her money back.” — Jenny’s analogy ([44:02])
• Practical Encouragement:
  • “You can do this... Sit down and write it out: this is what this path looks like for me. You are empowered as the business owner to decide what happens.” — Jenny ([38:31])
• Clarity for Solo and ICs:
  • “If you’re an independent contractor, you are self-employed—the distinction is more about where you work. When it comes to the PPP, you only apply once for your whole business.” — Jenny ([64:09])
• On Taxability:
  • “The PPP loan forgiveness is specifically not taxable. For the $10,000 grant, we don’t know yet—but if it is taxable, your business expenses should offset it.” — Jenny ([75:29])

Timestamps for Key Segments

• Introduction, setting the stage: 00:31–03:52
• Guest intro and mindset on financial decisions: 03:52–06:49
• Clarifying IC vs. Employee status: 06:49–08:13
• Overview of three support options: 08:13–10:25
• Unemployment explained (expanded coverage): 13:06–17:24
• EIDL / $10,000 grant detailed: 17:48–32:09
• PPP Loans step-by-step & forgiveness: 34:08–46:18
• Documentation, business practices: 48:31–49:02
• Live listener Q&A (various practical nuances): 49:29–75:29
• Closing reflections: 77:39–79:11

Practical Takeaways

• Apply Early, Stay Informed: Relief options are time-sensitive and may evolve. Regularly check official resources and your state-specific guidelines.
• Be Proactive, Not Perfectionist: In times of confusion, doing “your best with available information” is key.
• Clarify Your Entity & Revenue: Know your business status and how/where your revenue comes from before applying.
• Help ICs Help Themselves: Share resources, don’t try to “protect” them by misclassifying pay.
• Keep Records, Separate Accounts: If you haven’t before, now is the time to separate business and personal finances for clarity and compliance.

Further Resources

• Jenny's Resource Page: Linked in the episode for detailed guides, sample forms, links to SBA, Treasury, and IRS info.
• State Unemployment Sites: Check for updates on partial unemployment options.

In the Words of the Hosts...

“I just want to acknowledge you guys as therapists...I know you’re going to be doing amazing work for months and years after this for the impact that’s really affecting humanity.”
— Katie ([78:01])

“Thank you for sharing your superpower with us...You really do have a gift at being able to simplify things.”
— Kate ([77:39])

This summary is designed to help therapists in private practice confidently navigate financial relief options under the CARES Act and make strong, well-informed business decisions—without having to decode bureaucratic language or sift through misinformation.