Health Care Providers, Your COVID-19 Economic Relief is Here
March 28, 2020
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Medical providers affected financially by the Coronavirus (COVID-19) pandemic now have help: the CARES Act, a $2.2 trillion federal stimulus package.
A new federal emergency loans plan is giving small businesses — including health care practices — a lifeline to keep their payroll costs, mortgage interest and other debt under control during the Coronavirus (COVID-19) pandemic.
Starting Friday, April 3, 2020, health care providers may apply for up to $10 million in emergency loans under the Small Business Administration (SBA) Paycheck Protection Program (PPP).
We at Chapman Law Group see this as great news for our health care provider clients. This loan program will allow family physician practices, urgent care clinics, pharmacies, physical therapy centers, massage therapy clinics, dental offices and pain clinics to confidently sustain their practices during COVID-19.
If your practice is facing financial distress due to the Coronavirus outbreak, we strongly recommend looking into this opportunity. Here is a breakdown on how it works — and how it can work for you.
The U.S. Department of the Treasury and the SBA has earmarked $350 billion for the SBA PPP program, which is part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
If your practice has been in operation since February 15, 2020, and you have no more than 500 employees (full time, part time and any other status), your business is eligible.
Besides the 500-employee limit, lenders must also confirm that your health care practice:
Lenders will not need confirmation that your practice sought, and was unable to obtain, a loan elsewhere. Also, neither a personal guarantee nor collateral are required for the emergency loan.
You may borrow up to 2.5 times your practice’s average monthly payroll costs, not to exceed $10 million.
To do this, you must determine and differentiate “included payroll costs” and “excluded payroll costs,” then subtract the latter from the former.
An “included payroll cost” is “the sum of payments of any compensation with respect to employees that is”:
“Excluded payroll costs” are:
Your health care practice may qualify for loan forgiveness equal to the amount you spent on the following items during the eight-week period beginning on the date of the origination of the loan:
(Note, though, that the loan forgiveness cannot exceed the principal.)
Yes, so long as there has been a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
You are allowed to apply for one emergency loan per business entity. This means if you have multiple health care entities, you can apply for multiple loans.
Starting April 3, 2020, health care practices “can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.”
You may find a sample SBA PPP application form here.
Before you apply for an SBA PPP emergency loan, you should seek guidance from your CPA, SBA-certified lender or financial consultant on whether this program is right for your health care practice.
For concerns over whether your health care practice is keeping in compliance and following regulatory procedure during the Coronavirus pandemic, we at Chapman Law Group are here for you. Our health care attorneys will keep you apprised on new COVID-19 developments that have a direct effect on your business. Reach out to us today.
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Michigan Office
1441 W. Long Lake Road, Suite 310
Troy, MI 48098
Phone: (248) 644-6326
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