Coronavirus Aid, Relief, and Economic Security Act Question and Answers
Coronavirus Aid, Relief, and Economic Security Act Question and Answers
HOSPITALS AND HEALTH SYSTEM What financial assistance is available for hospitals, health systems and health care providers in the bill? One of the primary ways the bill supports our health system is a $100 billion fund, run through the Public Health and Social Services Emergency Fund (PHSSEF), to cover non-reimbursable expenses attributable to Covid-19. All health care entities that provide health care, diagnoses or testing are eligible for funding.
Additional funding mechanisms, such as Medicare payment boosts, support for community health centers and additional appropriated funding, are discussed in more detail below. What is the process and criteria for hospitals, health systems and health care providers to receive the PHSSEF funding? The $100 billion PHSSEF fund is designed to be immediately responsive to needs.
HHS is instructed to review applications and make payments on a rolling basis, in order to get money into the health system as quickly as possible. This is in contrast to a more traditional competitive grant process, under which HHS would solicit applications by a certain deadline and review all applications together – a process that would take considerably more time. HHS will instead release the funds to health care entities on a rolling basis as qualified applications are received.
As such, HHS is given significant flexibility in determining how the funds are allocated, as opposed to operating under a mandated formula or process for awarding the funds. This is to ensure that the funding is nimble enough to meet all needs and that the fund disperses money fast enough to help struggling entities. The Secretary is expected to release guidance on the application process shortly, and Congress will continue to work with the Administration to ensure that the funding and application process works as intended. What expenses qualify for funding?
All non-reimbursable expenses attributable to Covid-19 qualify for funding. Examples include building or retrofitting new ICUs, increased staffing or training, personal protective equipment, the building of temporary structures and more. Forgone revenue from cancelled procedures, which has put significant strain on the health care system, is also a qualified expense. It is important to note that this fund can only be used for non-reimbursable expenses. Any expenses reimbursed or obligated to be reimbursed by insurance or other mechanisms are not eligible. The bill instructs the Secretary to establish a reconciliation process under which payments will have to be returned to the fund if other sources provide reimbursement for expenses. Can health care entities access funds under the PHSSEF if they are also eligible for funding from another government program?
Yes. The language states that the funds may not be used for expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Even if qualified 2 expenses are eligible for reimbursement from another mechanism, an entity may still apply for funding from the PHSSEF fund while simultaneously applying for funding from other sources. However, should the entity subsequently receive reimbursement for expenses from any other source after receiving funding for the same expenses from the PHSSEF fund, the entity will be required to re-pay the funding it received from the PHSSEF fund.
This same principal also applies to the new SBA7(a) loans Paycheck Protection Program forgivable loans, the SBA’s Economic Injury Disaster Loan (EIDL) Program, and the new EIDL Emergency Grant Program.. What is the process for hospitals, health systems and health care providers to apply for and receive funding under the 7(a) SBA Paycheck Protection Program? Small businesses and 501(c)(3) non-profit organizations, including hospitals, health systems, and health care providers, are eligible to apply for the Small Business Administration’s Paycheck Protection Program.
Through this program, a small business or organization can apply to an SBA-approved lender for a loan of up to 250% of your average monthly payroll costs to cover eight weeks of payroll as well as help with other expenses like rent, mortgage payments, and utilities. This loan can be forgiven based on maintaining employee and salary levels. For any portion of the loan that is not forgiven, the terms include a maximum term of 10 years, a maximum interest rate of 4 percent.
Small businesses and organizations will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. To be eligible, small businesses and 501(c)(3) non-profit organizations must have fewer than 500 employees, or more if SBA’s size standards for the non-profit allows. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. What support is included for community health centers?
The Coronavirus Aid, Relief, and Economic Security Act provides $1.32 billion in supplemental funding for community health centers (CHCS), which are on the front lines in addressing COVID-19 in underserved communities across the country. This funding is in addition to the $100 million distributed by the Health Resources and Services Administration (HRSA) to CHCs on March 24th. Community Health Centers can also access the PHSEFF fund. If I have private insurance, will I have to pay for a coronavirus test?
The Families First Coronavirus Act required that all private insurance plans cover coronavirus testing without deductibles, coinsurance, or co-pays. That bill also prohibited plans from using tools like prior authorization to limit access to testing. The CARES Act makes a technical correction to ensure that the policy covers all tests that meet the appropriate standards. Insurers also have to cover fees for visits to the ER, an urgent care center, or a doctor’s office associated with getting a test without cost sharing. If I have private insurance, how does this bill affect the cost of a vaccine when one becomes available?
The Affordable Care Act required that preventive services and vaccines be covered by private insurance without cost-sharing. Normally, these services and vaccines are covered starting on the 3 first day of the plan year beginning after they get a favorable rating or recommendation from the United States Preventive Services Task Force or the Advisory Committee on Immunization Practices. This section requires that coverage without cost sharing begin fifteen days after getting a favorable rating or recommendation.
MEDICARE How does this bill increase access to telehealth services for seniors and other Medicare beneficiaries? The CARES Act gives the Secretary of Health and Human Services (HHS) broad authority to allow more health care providers to provide telehealth services to Medicare beneficiaries, including in the beneficiaries’ homes to avoid potential exposure to COVID-19, and provide more flexibility in terms of how those telehealth services can be provided. Once enacted into law, the HHS Secretary must put out guidance explaining how this expanded waiver authority will be used to increase access to telehealth services for seniors and other Medicare beneficiaries. I’ve heard from Federally Qualified Health Centers (FQHCs) (including Community Health Centers (CHCs)) and Rural Health Clinics (RHCs) that the Administration won’t allow them to use telehealth and get paid.
Does this bill help those providers deliver care via telehealth? Yes. The CARES Act requires the HHS Secretary to provide Medicare payment to FQHCs (including CHCs) and RHCs for telehealth services provided to seniors and other Medicare beneficiaries, including in the beneficiaries’ homes to avoid potential exposure to COVID-19, during the COVID-19 public health emergency. Medicare would be required to pay the FQHC or RHC at rates similar to those for telehealth services provided from a doctor’s office. Costs associated with those telehealth services would not affect the prospective payment system for FQHCs or the all-inclusive rates for RHCs.
How does this bill help clinical laboratories when it comes to Medicare? The CARES Act prevents scheduled Medicare payment cuts for clinical diagnostic laboratory tests furnished to Medicare beneficiaries in 2021. It also delays by one year—until 2022—the upcoming reporting period during which laboratories are required to report private payor data. How much will patients have to pay for the COVID-19 vaccine once it becomes available? The CARES Act ensures that the vaccine itself and its administration is free to beneficiaries with Medicare Part B and those with Medicare Advantage who receive the vaccine from an innetwork provider.
Additionally, the Families First Coronavirus Act required that all private insurance plans cover coronavirus testing without deductibles, coinsurance, or co-pays. That bill also prohibited plans from using tools like prior authorization to limit access to testing. The CARES Act makes a technical correction to ensure that the policy covers all tests that meet the appropriate standards. Insurers also have to cover fees for visits to the ER, an urgent care center, or a doctor’s office associated with getting a test without cost sharing.
4 The Affordable Care Act required that preventive services and vaccines be covered by private insurance without cost-sharing. Normally, these services and vaccines are covered starting on the first day of the plan year beginning after they get a favorable rating or recommendation from the United States Preventive Services Task Force or the Advisory Committee on Immunization Practices. This section requires that coverage without cost sharing begin fifteen days after getting a favorable rating or recommendation. How will seniors access the medications they need while also being told it’s better to stay at home? In the past, Medicare drug plans only let beneficiaries receive a 30 day supply of their prescription.
Under the CARES Act, during the COVID-19 Public Health Emergency (PHE) a senior on Medicare can get up to 90 days of a prescription if that is what the doctor prescribed, as long as there are no safety concerns. Medicare drug plans will also allow beneficiaries to fill prescription early for refills up to 90 days, depending on the prescription. Hospitals are facing cash flow challenges due to canceling elective services. Is there anything in this bill to help hospitals stay afloat, even temporarily? The COVID-19 emergency has created significant cash flow concerns for many hospitals. Hospitals need reliable and stable cash flow to help them maintain and support their workforce, buy essential supplies, create additional infrastructure, and keep their doors open to care for patients.
During the COVID-19 public health emergency (PHE), the CARES Act creates the opportunity for hospitals to receive accelerated payments. Specifically, acute care hospitals, critical access hospitals (CAHs), children’s hospitals, and prospective payment system-exempt cancer hospitals (PCHs) will be able to request accelerated Medicare payments for inpatient hospital services. This is an expanded set of hospitals compared with the existing accelerated payment program. Rather than waiting until claims have been processed to issue payment,
Medicare will work with qualified and interested hospitals to estimate their upcoming payments and give that money to the hospital in advance. Qualified facilities can request a lump sum or periodic payment reflecting up to six months of Medicare services. Accelerated payments must be repaid to Medicare, however a qualifying hospital would not be required to start paying Medicare back for four months after receiving the first payment. Hospitals would have at least 12 months to complete repayment without paying interest. Hospitals interested in receiving accelerated payments should contact their Medicare Administrative Contractor (MAC). To learn which MAC to contact, please look here.
Does the bill give additional flexibility for hospice providers? Yes. In order for a qualified beneficiary to receive hospice benefits, a hospice physician or nurse practitioner must certify their eligibility. Typically, a recertification must be done in person. The CARES Act allows hospice physicians and nurse practitioners to conduct these visits via telehealth for the duration of the PHE. 5 Many hospitals are concerned that there aren’t enough ICU beds to take care of those with COVID-19, and inpatient rehabilitation hospitals (IRF) and long-term care hospitals (LTCH) are trying to help build capacity. However, current rules and regulations won’t allow them to take certain patients.
What does The CARES Act do to help? The CARES Act makes changes to both IRFs and LTCHs to provide hospitals with more flexibility when discharging patients in order to maximize bed capacity. It also opens up existing beds at IRFs and LTCHs to increase the availability of post-acute services. Currently, in order to be admitted to an IRF, Medicare patients must be expected to participate in at least three hours of intensive rehabilitation at least five days per week (also known as the “three-hour rule”). The CARES Act waives this requirement so that IRFs have the ability to accept more patients who may otherwise be sent to other post-acute facilities, such as nursing homes.
Patients who are admitted to LTCHs usually must meet certain clinical criteria for an LTCH to receive a higher Medicare payment. If less than half of an LTCH’s patients meet these criteria, they are no longer eligible to receive any LTCH payments. The CARES Act waives both of these policies for the duration of the PHE so that LTCHs may accept as many patients as necessary at their LTCH rate, without regard to the clinical criteria. By waiving these criteria, an LTCH will be able to take more patients from an acute care hospital and still get paid. With more patients needing to stay at home, and a growing concern over health care workforce shortages due to COVID-19, how does The CARES Act help those who depend on the home health benefit?
Under current law, only physicians are able to certify the need for home health services. The CARES Act makes a permanent, statutory change to allow physician assistants, nurse practitioners, and clinical nurse specialists to order home health services for beneficiaries, reducing delays and increasing beneficiary access to care in the safety of their home. The CARES Act also directs the Secretary of Health and Human Services (HHS) to encourage the use of telecommunications systems, including remote patient monitoring, to deliver home health services consistent with the beneficiary care plan during the COVID-19 emergency period. This allows patients to receive certain home health services without a provider entering their home. Treating patients with COVID-19 is very resource intensive for hospitals. How will Medicare ensure that hospitals are adequately reimbursed for treating COVID-19 patients?
The CARES Act increases Medicare reimbursement to care for a COVID-19 patient by 20 percent (specifically, the Act increases the weighting factor of DRGs for inpatients diagnosed with COVID-19 by 20 percent). This add-on payment for inpatient hospital services recognizes the increased costs incurred by providers and will be applied for the duration of the COVID-19 emergency. 6 If a hospital has not treated any cases of COVID-19, are there other ways it can benefit from the Medicare policies in the bill? Yes. The CARES Act temporarily lifts the Medicare sequester, effectively adding an additional two percent for services provided from May 1 through December 31, 2020.
This will boost payments for hospital, physician, nursing home, home health, and other care, giving prompt economic assistance to health care providers that treat Medicare patients. If a patient has COVID-19 and has to enter the hospital, can their regular personal care attendant, who they depend on at home, still help while the patient is in the hospital? Under the CARES Act, state Medicaid programs now have the ability, should they choose to pick up the option, to allow direct support professionals to continue to provide care and services for patients they are supporting in the hospital, including seniors and individuals with disabilities. SMALL BUSINESSES What support is there for small businesses?
Refundable tax credits are available for private-sector employers that are required to offer coronavirus related paid leave to employees. IRS will be posting information soon on these credits on its website (www.irs.gov), including information on how to obtain advance payment of these credits. The employer side of certain payroll taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date. Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral. An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the new SBA Paycheck Protection Program.
Any business that has been forced to fully or partially suspend operations, or that has seen a significant drop in revenues is eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees. For businesses with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed. There is an overall limit on wages per employee of $10,000. The credit can be claimed against the business’s quarterly payroll tax liability and is fully refundable to the extent of excess. There will also be options to receive advance payments. Small business owners should lookout for information at IRS.gov and talk to their payroll service provider, as applicable. $350 billion is made available for a new Small Business Administration Paycheck Protection Program (PPP).
The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy to snap-back quicker after the crisis. 7 PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. $17 billion is available for immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
The CARES Act creates a new SBA Economic Injury Emergency Grant Program. These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. What type of assistance will independent contractors be eligible for? Refundable tax credits are available for independent contractors who would have qualified for coronavirus related paid leave if they were employees. IRS will be posting information soon on these credits on its website (www.irs.gov), including information on how to claim these credits.
50 percent of certain self-employment taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date. Independent contractors are also eligible for assistance through the Small Business Administration’s new Paycheck Protection Program and Economic Injury Emergency Grant Program. What assistance is there for nonprofits? The employer side of certain payroll taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.
Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral. Certain tax-exempt organizations that have been forced to fully or partially suspend operations, or that have seen a significant drop in revenues are eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.
Organizations that participate in the SBA Paycheck Protection Loan Program are not eligible for the credit. For organizations with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed. There is an overall limit on wages per employee of $10,000. The credit can be claimed against 8 the organization’s quarterly payroll tax liability and is fully refundable to the extent of excess.
There will also be options to receive advance payments. 501(c)(3) nonprofit organizations, along with small businesses, 501(c)(19) veterans organizations, and tribal businesses, are eligible to apply for the Small Business Administration’s Paycheck Protection Program. Through this program, a nonprofit organization can apply to an SBA-approved lender for a loan of up to 250% of your average monthly payroll costs to cover eight weeks of payroll as well as help with other expenses like rent, mortgage payments, and utilities. The maximum loan amount is $10 million. This loan can be forgiven based on maintaining employee and salary levels.
For any portion of the loan that is not forgiven, the terms include a maximum term of 10 years, a maximum interest rate of 4 percent. Nonprofit organizations will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. To be eligible, nonprofit organizations must have fewer than 500 employees, or more if SBA’s size standards for the non-profit allows, and comply with the SBA’s affiliation rules for nonprofits. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls.
Loans are available through June 30, 2020. A provision in the CARES package would authorize a program to allow any mid-sized nonprofit between 500 and 10,000 employees to get access to quick, low cost, government guaranteed credit through their local lender or financial institution. These organizations need cash now and so this program is set up to get money quickly in the hands of those who need it in order to preserve workforce during the COVID-19 health emergency.
The Treasury Department and Federal Reserve will have a degree of flexibility in designing the new program, but the expectation is for loan terms to last for no more than five years and to cover up to 100% of payroll over the previous 180 days, or 50% of revenues for the past year, for eligible organizations. Underwriting requirements should be kept simple, based on employer size, creditworthiness as of January 2020, and the ability to produce recent tax returns or audited financial statements.
The legislation prescribes that the loans must carry an interest rate of no greater than 2% and to provide forbearance on principal and interest for at least the first 6 months. Borrowers will also be required to protect workers. Any loan recipient will have to attest that they’ll use the money to keep workers employed – at least to 90% of their payroll – and keep workers paid at close to full compensation and benefits. Borrowers will also commit to rehiring their workforce back to preexisting levels upon the end of the COVID-19 health emergency. The most efficient way to deliver fast credit to eligible organizations is through existing relationships with local lenders.
Under the program, any qualified organization should be able to receive financing at a local bank, credit union, CDFI, or qualified nonbank lender. What types of businesses and entities are eligible for a PPP loan? Businesses and entities must have been in operation on February 15, 2020. Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 9 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals. Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived. Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company What are SBA affiliation rules? Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.”
Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Please see this resource for more on these rules and how they can impact your business’s eligibility. What types of non-profits are eligible for the SBA PPP assistance? In general, 501(c)(3) and 501(c)(19) non-profits with 500 employees or fewer as most non-profit SBA size standards are based on employee count, not revenue. You can check here. How is the PPP loan size determined?
Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million. If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date. If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020. If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum. What costs are eligible for payroll under the PPP? 10 Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent) Payment for vacation, parental, family, medical, or sick leave Allowance for dismissal or separation Payment required for the provisions of group health care benefits, including insurance premiums Payment of any retirement benefit Payment of State or local tax assessed on the compensation of employees What costs are not eligible for payroll under the PPP? Employee/owner compensation over $100,000 Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
Compensation of employees whose principal place of residence is outside of the U.S Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act What are allowable uses of loan proceeds with a PPP loan? Payroll costs (as noted above) Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums Employee salaries, commissions, or similar compensations (see exclusions above) Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation) Rent (including rent under a lease agreement) Utilities Interest on any other debt obligations that were incurred before the covered period What are the loan term, interest rate, and fees for a PPP loan?
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge). How is the forgiveness amount calculated under PPP? 11 Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000): Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment. How do I get forgiveness on my PPP loan?
You must apply through your lender for forgiveness on your loan. In this application, you must include: Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities. Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use. What happens after the forgiveness period for a PPP loan? Any loan amounts not forgiven is carried forward as an ongoing loan with max terms of 10 years, at 4% max interest. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again. Can I get more than one PPP loan? No, an entity is limited to one PPP loan.
Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity. What kind of lender can I get a PPP loan from? All current SBA 7(a) lenders are eligible lenders for PPP. The Department of Treasury will also be in charge of authorizing new lenders, including non-bank lenders, to help meet the needs of small business owners. How does the PPP loan coordinate with SBA’s existing loans? Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?
12 Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan. Refer to those sections for more information. SMALL BUSINESS DEBT RELIEF PROGRAM Which SBA loans are eligible for debt relief under this program? 7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans. Disaster loans are not eligible. How does debt relief under this program work with a PPP loan? Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will not apply to a PPP loan. How do I know if I’m eligible for a 7(a), 504, or microloan?
In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a sound business purpose. To check whether your business is considered small, you will need your business’s 6-digit North American Industry Classification System (NAICS) code and 3-year average annual revenue. Each program has different requirements, see https://www.sba.gov/funding-programs/loans for more details. What is a 7(a) loan and how do I apply? 7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender.
SBA has a free referral service tool called Lender Match to help find a lender near you. What is a 504 loan and how do I apply? The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.
What is a microloan and how do I apply? The Microloan Program provides loans up to $50,000 to help small businesses and certain notfor-profit childcare centers to start up and expand. The average microloan is about $13,000. 13 These loans are delivered through mission-based lenders who are also able to provide business counseling. SBA has a free referral service tool called Lender Match to help find a microlender near you. I am unfamiliar with SBA loans, can anyone help me apply? Yes, SBA resource partners are available to help guide you through the loan application process. You can find your nearest Small Business Development Center (SBDC) or Women’s Business Center here.
ECONOMIC INJURY DISASTER LOANS & EMERGENCY ECONOMIC INJURY GRANTS Are businesses and private non-profits in my state eligible for an EIDL related to COVID-19? Yes, those suffering substantial economic injury in all 50 states, DC, and the territories may apply for an EIDL. What is an EIDL and what is it used for? EIDLs are lower interest loans of up to $2 million, with principal and interest deferment available for up to 4 years that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. Who is eligible for an EIDL? Small business concerns (including sole proprietorships, with or without employees) Independent contractors Cooperatives and employee owned businesses Private non-profits Tribal small businesses Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-profits of any size. See below for more info on size standards. My private non-profit is not a 501(c)(3). Is it still eligible for an EIDL and a grant?
Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law. However, a recipient that is principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or primarily engaged in political or lobbying 14 activities is not eligible to receive an EIDL.
If you are uncertain whether you qualify, please consult with legal counsel to determine whether your organization meets program criteria. Who is eligible for an Emergency Economic Injury Grant? Those eligible for an EIDL and who have been in operation since January 31, 2020, when the public health crisis was announced. How long are Emergency Economic Injury Grants available? January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.
If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan? Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
How do I know if my business is a small business? Please visit https://www.sba.gov/size-standards/ to find out if your business meets SBA’s small business size standards. You will need the 6-digit North American Industry Class
HOSPITALS AND HEALTH SYSTEM What financial assistance is available for hospitals, health systems and health care providers in the bill? One of the primary ways the bill supports our health system is a $100 billion fund, run through the Public Health and Social Services Emergency Fund (PHSSEF), to cover non-reimbursable expenses attributable to Covid-19. All health care entities that provide health care, diagnoses or testing are eligible for funding.
Additional funding mechanisms, such as Medicare payment boosts, support for community health centers and additional appropriated funding, are discussed in more detail below. What is the process and criteria for hospitals, health systems and health care providers to receive the PHSSEF funding? The $100 billion PHSSEF fund is designed to be immediately responsive to needs.
HHS is instructed to review applications and make payments on a rolling basis, in order to get money into the health system as quickly as possible. This is in contrast to a more traditional competitive grant process, under which HHS would solicit applications by a certain deadline and review all applications together – a process that would take considerably more time. HHS will instead release the funds to health care entities on a rolling basis as qualified applications are received.
As such, HHS is given significant flexibility in determining how the funds are allocated, as opposed to operating under a mandated formula or process for awarding the funds. This is to ensure that the funding is nimble enough to meet all needs and that the fund disperses money fast enough to help struggling entities. The Secretary is expected to release guidance on the application process shortly, and Congress will continue to work with the Administration to ensure that the funding and application process works as intended. What expenses qualify for funding?
All non-reimbursable expenses attributable to Covid-19 qualify for funding. Examples include building or retrofitting new ICUs, increased staffing or training, personal protective equipment, the building of temporary structures and more. Forgone revenue from cancelled procedures, which has put significant strain on the health care system, is also a qualified expense. It is important to note that this fund can only be used for non-reimbursable expenses. Any expenses reimbursed or obligated to be reimbursed by insurance or other mechanisms are not eligible. The bill instructs the Secretary to establish a reconciliation process under which payments will have to be returned to the fund if other sources provide reimbursement for expenses. Can health care entities access funds under the PHSSEF if they are also eligible for funding from another government program?
Yes. The language states that the funds may not be used for expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse. Even if qualified 2 expenses are eligible for reimbursement from another mechanism, an entity may still apply for funding from the PHSSEF fund while simultaneously applying for funding from other sources. However, should the entity subsequently receive reimbursement for expenses from any other source after receiving funding for the same expenses from the PHSSEF fund, the entity will be required to re-pay the funding it received from the PHSSEF fund.
This same principal also applies to the new SBA7(a) loans Paycheck Protection Program forgivable loans, the SBA’s Economic Injury Disaster Loan (EIDL) Program, and the new EIDL Emergency Grant Program.. What is the process for hospitals, health systems and health care providers to apply for and receive funding under the 7(a) SBA Paycheck Protection Program? Small businesses and 501(c)(3) non-profit organizations, including hospitals, health systems, and health care providers, are eligible to apply for the Small Business Administration’s Paycheck Protection Program.
Through this program, a small business or organization can apply to an SBA-approved lender for a loan of up to 250% of your average monthly payroll costs to cover eight weeks of payroll as well as help with other expenses like rent, mortgage payments, and utilities. This loan can be forgiven based on maintaining employee and salary levels. For any portion of the loan that is not forgiven, the terms include a maximum term of 10 years, a maximum interest rate of 4 percent.
Small businesses and organizations will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. To be eligible, small businesses and 501(c)(3) non-profit organizations must have fewer than 500 employees, or more if SBA’s size standards for the non-profit allows. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. What support is included for community health centers?
The Coronavirus Aid, Relief, and Economic Security Act provides $1.32 billion in supplemental funding for community health centers (CHCS), which are on the front lines in addressing COVID-19 in underserved communities across the country. This funding is in addition to the $100 million distributed by the Health Resources and Services Administration (HRSA) to CHCs on March 24th. Community Health Centers can also access the PHSEFF fund. If I have private insurance, will I have to pay for a coronavirus test?
The Families First Coronavirus Act required that all private insurance plans cover coronavirus testing without deductibles, coinsurance, or co-pays. That bill also prohibited plans from using tools like prior authorization to limit access to testing. The CARES Act makes a technical correction to ensure that the policy covers all tests that meet the appropriate standards. Insurers also have to cover fees for visits to the ER, an urgent care center, or a doctor’s office associated with getting a test without cost sharing. If I have private insurance, how does this bill affect the cost of a vaccine when one becomes available?
The Affordable Care Act required that preventive services and vaccines be covered by private insurance without cost-sharing. Normally, these services and vaccines are covered starting on the 3 first day of the plan year beginning after they get a favorable rating or recommendation from the United States Preventive Services Task Force or the Advisory Committee on Immunization Practices. This section requires that coverage without cost sharing begin fifteen days after getting a favorable rating or recommendation.
MEDICARE How does this bill increase access to telehealth services for seniors and other Medicare beneficiaries? The CARES Act gives the Secretary of Health and Human Services (HHS) broad authority to allow more health care providers to provide telehealth services to Medicare beneficiaries, including in the beneficiaries’ homes to avoid potential exposure to COVID-19, and provide more flexibility in terms of how those telehealth services can be provided. Once enacted into law, the HHS Secretary must put out guidance explaining how this expanded waiver authority will be used to increase access to telehealth services for seniors and other Medicare beneficiaries. I’ve heard from Federally Qualified Health Centers (FQHCs) (including Community Health Centers (CHCs)) and Rural Health Clinics (RHCs) that the Administration won’t allow them to use telehealth and get paid.
Does this bill help those providers deliver care via telehealth? Yes. The CARES Act requires the HHS Secretary to provide Medicare payment to FQHCs (including CHCs) and RHCs for telehealth services provided to seniors and other Medicare beneficiaries, including in the beneficiaries’ homes to avoid potential exposure to COVID-19, during the COVID-19 public health emergency. Medicare would be required to pay the FQHC or RHC at rates similar to those for telehealth services provided from a doctor’s office. Costs associated with those telehealth services would not affect the prospective payment system for FQHCs or the all-inclusive rates for RHCs.
How does this bill help clinical laboratories when it comes to Medicare? The CARES Act prevents scheduled Medicare payment cuts for clinical diagnostic laboratory tests furnished to Medicare beneficiaries in 2021. It also delays by one year—until 2022—the upcoming reporting period during which laboratories are required to report private payor data. How much will patients have to pay for the COVID-19 vaccine once it becomes available? The CARES Act ensures that the vaccine itself and its administration is free to beneficiaries with Medicare Part B and those with Medicare Advantage who receive the vaccine from an innetwork provider.
Additionally, the Families First Coronavirus Act required that all private insurance plans cover coronavirus testing without deductibles, coinsurance, or co-pays. That bill also prohibited plans from using tools like prior authorization to limit access to testing. The CARES Act makes a technical correction to ensure that the policy covers all tests that meet the appropriate standards. Insurers also have to cover fees for visits to the ER, an urgent care center, or a doctor’s office associated with getting a test without cost sharing.
4 The Affordable Care Act required that preventive services and vaccines be covered by private insurance without cost-sharing. Normally, these services and vaccines are covered starting on the first day of the plan year beginning after they get a favorable rating or recommendation from the United States Preventive Services Task Force or the Advisory Committee on Immunization Practices. This section requires that coverage without cost sharing begin fifteen days after getting a favorable rating or recommendation. How will seniors access the medications they need while also being told it’s better to stay at home? In the past, Medicare drug plans only let beneficiaries receive a 30 day supply of their prescription.
Under the CARES Act, during the COVID-19 Public Health Emergency (PHE) a senior on Medicare can get up to 90 days of a prescription if that is what the doctor prescribed, as long as there are no safety concerns. Medicare drug plans will also allow beneficiaries to fill prescription early for refills up to 90 days, depending on the prescription. Hospitals are facing cash flow challenges due to canceling elective services. Is there anything in this bill to help hospitals stay afloat, even temporarily? The COVID-19 emergency has created significant cash flow concerns for many hospitals. Hospitals need reliable and stable cash flow to help them maintain and support their workforce, buy essential supplies, create additional infrastructure, and keep their doors open to care for patients.
During the COVID-19 public health emergency (PHE), the CARES Act creates the opportunity for hospitals to receive accelerated payments. Specifically, acute care hospitals, critical access hospitals (CAHs), children’s hospitals, and prospective payment system-exempt cancer hospitals (PCHs) will be able to request accelerated Medicare payments for inpatient hospital services. This is an expanded set of hospitals compared with the existing accelerated payment program. Rather than waiting until claims have been processed to issue payment,
Medicare will work with qualified and interested hospitals to estimate their upcoming payments and give that money to the hospital in advance. Qualified facilities can request a lump sum or periodic payment reflecting up to six months of Medicare services. Accelerated payments must be repaid to Medicare, however a qualifying hospital would not be required to start paying Medicare back for four months after receiving the first payment. Hospitals would have at least 12 months to complete repayment without paying interest. Hospitals interested in receiving accelerated payments should contact their Medicare Administrative Contractor (MAC). To learn which MAC to contact, please look here.
Does the bill give additional flexibility for hospice providers? Yes. In order for a qualified beneficiary to receive hospice benefits, a hospice physician or nurse practitioner must certify their eligibility. Typically, a recertification must be done in person. The CARES Act allows hospice physicians and nurse practitioners to conduct these visits via telehealth for the duration of the PHE. 5 Many hospitals are concerned that there aren’t enough ICU beds to take care of those with COVID-19, and inpatient rehabilitation hospitals (IRF) and long-term care hospitals (LTCH) are trying to help build capacity. However, current rules and regulations won’t allow them to take certain patients.
What does The CARES Act do to help? The CARES Act makes changes to both IRFs and LTCHs to provide hospitals with more flexibility when discharging patients in order to maximize bed capacity. It also opens up existing beds at IRFs and LTCHs to increase the availability of post-acute services. Currently, in order to be admitted to an IRF, Medicare patients must be expected to participate in at least three hours of intensive rehabilitation at least five days per week (also known as the “three-hour rule”). The CARES Act waives this requirement so that IRFs have the ability to accept more patients who may otherwise be sent to other post-acute facilities, such as nursing homes.
Patients who are admitted to LTCHs usually must meet certain clinical criteria for an LTCH to receive a higher Medicare payment. If less than half of an LTCH’s patients meet these criteria, they are no longer eligible to receive any LTCH payments. The CARES Act waives both of these policies for the duration of the PHE so that LTCHs may accept as many patients as necessary at their LTCH rate, without regard to the clinical criteria. By waiving these criteria, an LTCH will be able to take more patients from an acute care hospital and still get paid. With more patients needing to stay at home, and a growing concern over health care workforce shortages due to COVID-19, how does The CARES Act help those who depend on the home health benefit?
Under current law, only physicians are able to certify the need for home health services. The CARES Act makes a permanent, statutory change to allow physician assistants, nurse practitioners, and clinical nurse specialists to order home health services for beneficiaries, reducing delays and increasing beneficiary access to care in the safety of their home. The CARES Act also directs the Secretary of Health and Human Services (HHS) to encourage the use of telecommunications systems, including remote patient monitoring, to deliver home health services consistent with the beneficiary care plan during the COVID-19 emergency period. This allows patients to receive certain home health services without a provider entering their home. Treating patients with COVID-19 is very resource intensive for hospitals. How will Medicare ensure that hospitals are adequately reimbursed for treating COVID-19 patients?
The CARES Act increases Medicare reimbursement to care for a COVID-19 patient by 20 percent (specifically, the Act increases the weighting factor of DRGs for inpatients diagnosed with COVID-19 by 20 percent). This add-on payment for inpatient hospital services recognizes the increased costs incurred by providers and will be applied for the duration of the COVID-19 emergency. 6 If a hospital has not treated any cases of COVID-19, are there other ways it can benefit from the Medicare policies in the bill? Yes. The CARES Act temporarily lifts the Medicare sequester, effectively adding an additional two percent for services provided from May 1 through December 31, 2020.
This will boost payments for hospital, physician, nursing home, home health, and other care, giving prompt economic assistance to health care providers that treat Medicare patients. If a patient has COVID-19 and has to enter the hospital, can their regular personal care attendant, who they depend on at home, still help while the patient is in the hospital? Under the CARES Act, state Medicaid programs now have the ability, should they choose to pick up the option, to allow direct support professionals to continue to provide care and services for patients they are supporting in the hospital, including seniors and individuals with disabilities. SMALL BUSINESSES What support is there for small businesses?
Refundable tax credits are available for private-sector employers that are required to offer coronavirus related paid leave to employees. IRS will be posting information soon on these credits on its website (www.irs.gov), including information on how to obtain advance payment of these credits. The employer side of certain payroll taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date. Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral. An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the new SBA Paycheck Protection Program.
Any business that has been forced to fully or partially suspend operations, or that has seen a significant drop in revenues is eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees. For businesses with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed. There is an overall limit on wages per employee of $10,000. The credit can be claimed against the business’s quarterly payroll tax liability and is fully refundable to the extent of excess. There will also be options to receive advance payments. Small business owners should lookout for information at IRS.gov and talk to their payroll service provider, as applicable. $350 billion is made available for a new Small Business Administration Paycheck Protection Program (PPP).
The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy to snap-back quicker after the crisis. 7 PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. $17 billion is available for immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
The CARES Act creates a new SBA Economic Injury Emergency Grant Program. These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. What type of assistance will independent contractors be eligible for? Refundable tax credits are available for independent contractors who would have qualified for coronavirus related paid leave if they were employees. IRS will be posting information soon on these credits on its website (www.irs.gov), including information on how to claim these credits.
50 percent of certain self-employment taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date. Independent contractors are also eligible for assistance through the Small Business Administration’s new Paycheck Protection Program and Economic Injury Emergency Grant Program. What assistance is there for nonprofits? The employer side of certain payroll taxes are deferred through the end of 2020. Deferred taxes will not become due until end of 2021 and end of 2022, with 50% of the liability being paid at each date.
Any business that does not have a loan forgiven under the new SBA Paycheck Protection Program is eligible for the payroll tax deferral. Certain tax-exempt organizations that have been forced to fully or partially suspend operations, or that have seen a significant drop in revenues are eligible for a 50-percent credit for wages paid to furloughed or reduced-hour employees.
Organizations that participate in the SBA Paycheck Protection Loan Program are not eligible for the credit. For organizations with 100 employees or less, the credit is based on all wages paid, regardless of whether an employee is furloughed. There is an overall limit on wages per employee of $10,000. The credit can be claimed against 8 the organization’s quarterly payroll tax liability and is fully refundable to the extent of excess.
There will also be options to receive advance payments. 501(c)(3) nonprofit organizations, along with small businesses, 501(c)(19) veterans organizations, and tribal businesses, are eligible to apply for the Small Business Administration’s Paycheck Protection Program. Through this program, a nonprofit organization can apply to an SBA-approved lender for a loan of up to 250% of your average monthly payroll costs to cover eight weeks of payroll as well as help with other expenses like rent, mortgage payments, and utilities. The maximum loan amount is $10 million. This loan can be forgiven based on maintaining employee and salary levels.
For any portion of the loan that is not forgiven, the terms include a maximum term of 10 years, a maximum interest rate of 4 percent. Nonprofit organizations will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. To be eligible, nonprofit organizations must have fewer than 500 employees, or more if SBA’s size standards for the non-profit allows, and comply with the SBA’s affiliation rules for nonprofits. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls.
Loans are available through June 30, 2020. A provision in the CARES package would authorize a program to allow any mid-sized nonprofit between 500 and 10,000 employees to get access to quick, low cost, government guaranteed credit through their local lender or financial institution. These organizations need cash now and so this program is set up to get money quickly in the hands of those who need it in order to preserve workforce during the COVID-19 health emergency.
The Treasury Department and Federal Reserve will have a degree of flexibility in designing the new program, but the expectation is for loan terms to last for no more than five years and to cover up to 100% of payroll over the previous 180 days, or 50% of revenues for the past year, for eligible organizations. Underwriting requirements should be kept simple, based on employer size, creditworthiness as of January 2020, and the ability to produce recent tax returns or audited financial statements.
The legislation prescribes that the loans must carry an interest rate of no greater than 2% and to provide forbearance on principal and interest for at least the first 6 months. Borrowers will also be required to protect workers. Any loan recipient will have to attest that they’ll use the money to keep workers employed – at least to 90% of their payroll – and keep workers paid at close to full compensation and benefits. Borrowers will also commit to rehiring their workforce back to preexisting levels upon the end of the COVID-19 health emergency. The most efficient way to deliver fast credit to eligible organizations is through existing relationships with local lenders.
Under the program, any qualified organization should be able to receive financing at a local bank, credit union, CDFI, or qualified nonbank lender. What types of businesses and entities are eligible for a PPP loan? Businesses and entities must have been in operation on February 15, 2020. Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 9 31(b)(2)(C) that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals. Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived. Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company What are SBA affiliation rules? Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.”
Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Please see this resource for more on these rules and how they can impact your business’s eligibility. What types of non-profits are eligible for the SBA PPP assistance? In general, 501(c)(3) and 501(c)(19) non-profits with 500 employees or fewer as most non-profit SBA size standards are based on employee count, not revenue. You can check here. How is the PPP loan size determined?
Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan size is always $10 million. If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date. If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020. If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum. What costs are eligible for payroll under the PPP? 10 Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent) Payment for vacation, parental, family, medical, or sick leave Allowance for dismissal or separation Payment required for the provisions of group health care benefits, including insurance premiums Payment of any retirement benefit Payment of State or local tax assessed on the compensation of employees What costs are not eligible for payroll under the PPP? Employee/owner compensation over $100,000 Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
Compensation of employees whose principal place of residence is outside of the U.S Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act What are allowable uses of loan proceeds with a PPP loan? Payroll costs (as noted above) Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums Employee salaries, commissions, or similar compensations (see exclusions above) Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation) Rent (including rent under a lease agreement) Utilities Interest on any other debt obligations that were incurred before the covered period What are the loan term, interest rate, and fees for a PPP loan?
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge). How is the forgiveness amount calculated under PPP? 11 Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000): Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment. How do I get forgiveness on my PPP loan?
You must apply through your lender for forgiveness on your loan. In this application, you must include: Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities. Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use. What happens after the forgiveness period for a PPP loan? Any loan amounts not forgiven is carried forward as an ongoing loan with max terms of 10 years, at 4% max interest. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again. Can I get more than one PPP loan? No, an entity is limited to one PPP loan.
Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity. What kind of lender can I get a PPP loan from? All current SBA 7(a) lenders are eligible lenders for PPP. The Department of Treasury will also be in charge of authorizing new lenders, including non-bank lenders, to help meet the needs of small business owners. How does the PPP loan coordinate with SBA’s existing loans? Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?
12 Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan. Refer to those sections for more information. SMALL BUSINESS DEBT RELIEF PROGRAM Which SBA loans are eligible for debt relief under this program? 7(a) loans not made under the Paycheck Protection Program (PPP), 504 loans, and microloans. Disaster loans are not eligible. How does debt relief under this program work with a PPP loan? Borrowers may separately apply for and take out a PPP loan, but debt relief under this program will not apply to a PPP loan. How do I know if I’m eligible for a 7(a), 504, or microloan?
In general, businesses must meet size standards, be based in the U.S., be able to repay, and have a sound business purpose. To check whether your business is considered small, you will need your business’s 6-digit North American Industry Classification System (NAICS) code and 3-year average annual revenue. Each program has different requirements, see https://www.sba.gov/funding-programs/loans for more details. What is a 7(a) loan and how do I apply? 7(a) loans are an affordable loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures and supplies. In the program, banks share a portion of the risk of the loan with SBA. There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender.
SBA has a free referral service tool called Lender Match to help find a lender near you. What is a 504 loan and how do I apply? The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery. You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.
What is a microloan and how do I apply? The Microloan Program provides loans up to $50,000 to help small businesses and certain notfor-profit childcare centers to start up and expand. The average microloan is about $13,000. 13 These loans are delivered through mission-based lenders who are also able to provide business counseling. SBA has a free referral service tool called Lender Match to help find a microlender near you. I am unfamiliar with SBA loans, can anyone help me apply? Yes, SBA resource partners are available to help guide you through the loan application process. You can find your nearest Small Business Development Center (SBDC) or Women’s Business Center here.
ECONOMIC INJURY DISASTER LOANS & EMERGENCY ECONOMIC INJURY GRANTS Are businesses and private non-profits in my state eligible for an EIDL related to COVID-19? Yes, those suffering substantial economic injury in all 50 states, DC, and the territories may apply for an EIDL. What is an EIDL and what is it used for? EIDLs are lower interest loans of up to $2 million, with principal and interest deferment available for up to 4 years that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. Who is eligible for an EIDL? Small business concerns (including sole proprietorships, with or without employees) Independent contractors Cooperatives and employee owned businesses Private non-profits Tribal small businesses Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-profits of any size. See below for more info on size standards. My private non-profit is not a 501(c)(3). Is it still eligible for an EIDL and a grant?
Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law. However, a recipient that is principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting, or primarily engaged in political or lobbying 14 activities is not eligible to receive an EIDL.
If you are uncertain whether you qualify, please consult with legal counsel to determine whether your organization meets program criteria. Who is eligible for an Emergency Economic Injury Grant? Those eligible for an EIDL and who have been in operation since January 31, 2020, when the public health crisis was announced. How long are Emergency Economic Injury Grants available? January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.
If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan? Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
How do I know if my business is a small business? Please visit https://www.sba.gov/size-standards/ to find out if your business meets SBA’s small business size standards. You will need the 6-digit North American Industry Class
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