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Through a mix of increased reimbursements, advanced payments, targeted grants, and a U.S. Department of Health and Human Services (HHS) emergency fund, the new Coronavirus Aid, Relief, and Economic Security (CARES) Act provides $150 billion of financial assistance for the healthcare sector.  For physician practices with fewer than 500 employees, it also offers access to a potentially forgivable loan through a new $349 billion Small Business Administration (SBA) program called the Paycheck Protection Program.

Specifically created “to help small businesses keep their workforce employed,” the program is open to any business with less than 500 employees (including 501(c)(3) non-profits, 501(c)(19) veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors) affected by the coronavirus.  Furthermore, the SBA guidance issued this week said that loan terms under the program will be the same for all borrowers as follows: 

  • Loans can be for a total amount equal to up to 2.5 times a borrower’s average monthly payroll costs from 2019.  That total amount is subject to a $10 million cap and payroll costs will be capped at $100,000 annualized for each employee. 
  • Loan proceeds can only be used for: payroll costs and benefits; interest on mortgage obligations, incurred before February 15, 2020; rent, under lease agreements in force before February 15, 2020; and utilities, for which service began before February 15, 2020. 
  • A loan will be 100% fully forgiven if: (1) the funds are used for payroll costs, mortgage interest, rent, and utilities over the eight-week period after the loan is made (but not more than 25% of the forgiven amount can be used for non-payroll costs) and (2) employee and compensation levels are maintained. 
  • This loan has a maturity of 2 years and an interest rate of 1%.  All loan payments will be deferred for six months. Additionally, no collateral or personal guarantees are required and neither the government nor lenders can charge small businesses any fees.

While there are certainly more details to consider and “the devil is in the details,” in these difficult times qualifying physician practices may consider this loan/grant program worth pursuing.  

To do so, practices should check with their local banks to see whether they are participating.  Starting today, businesses can apply for funds through any existing SBA lender or any participating federally insured depository institution (bank), federally insured credit union, or Farm Credit System institution.  

Applicants will need to complete the Paycheck Protection Program loan application here and submit it with the required documentation to an approved lender that can process their application.  Loans will be available through June 30, 2020 and are considered on a “first come first served” basis so program funding limitations, absent additional government action, may impact loan availability for those businesses applying later in the availability timeframe. 

For more details on the program, please see the U.S. Small Business Administration’s program website here and the U.S. Treasury’s program factsheet here

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Chris Emper

Government Affairs Advisor, NextGen Healthcare

Chris Emper, JD, MBA, is government affairs advisor at NextGen Healthcare and president of Emper Healthcare Advisors—a health IT industry advisory and consulting services firm in Washington, D.C. that specializes in helping healthcare providers and technology companies successfully navigate and comply with complex regulations and value-based reimbursement models. Prior to forming Emper Healthcare Advisors in 2016, Chris was vice president of Government Affairs at NextGen Healthcare (NASDAQ: NXGN) and Chair of the Electronic Health Record Association (EHRA) Public Policy committee.

An expert in The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), The Patient Protection and Affordable Care Act (ACA), and The 21st Century Cures Act, Chris is a frequent speaker at industry conferences and has written or appeared in articles in publications such as Politico, Health Data Management, Accountable Care News, and Medical Economics. From 2016-2019, Chris served as Chair of the HIMSS Government Relations Roundtable, a leading coalition of health IT government affairs professionals.

Prior to joining NextGen Healthcare in 2013, Chris served as a Domestic Policy Advisor for former Massachusetts Governor Mitt Romney’s 2012 Presidential Campaign, where he advised the campaign on policy issues including healthcare, technology, and innovation. He holds a law degree and an MBA from Villanova University and a BA from Boston College.