Home Health & Hospice Week

Apply for a PPP loan before the funds are all gone.

If accelerated payments aren’t a good fit for your agency, there are other avenues for funding you can pursue due to COVID-19 impacts — that you might not have to pay back.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law March 27 offers up to $349 billion in loans to eligible entities, including businesses and ESOPs, with 500 employees or less under the Paycheck Protection Program (PPP) administered by the Small Business Administration.

Unlike with Medicare’s accelerated payments, SBA will forgive the PPP loans “if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities,” the SBA says on its PPP webpage.

“Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

This loan has a maturity of two years and an interest rate of 0.5 percent, the SBA says. The first payment is deferred six months. Loans may be up to 2.5 times the borrower’s average monthly payroll costs, capped at $10 million.

How to access: “You 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,” the SBA says. There are more than 1,800 of those.“Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.”

At press time, lenders were slated to start processing applications April 3. In some cases, loans will be approved on the same day borrowers apply.

Pro: PPP loans are available with no personal guaranties of shareholders, members or partners, no collateral, and no proving the recipient cannot obtain funds elsewhere, says finance attorney Mary Kay Shaver with Varnum in Grand Rapids, Michigan.

Don’t delay, apply today: Observers are worried the $349 billion allotted for the program is much too low.“The government is advising borrowers to apply as soon as possible given the loan cap on the program,” says the U.S. Chamber of Commerce in a fact sheet about the program.

But government officials have suggested Congress is ready to raise the cap as soon as the funds are depleted.v

Note: The SBA PPP webpage, with links to more details, is at www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp. The four-page Chamber of Commerce fact sheet is at www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf.