The Small Business Administration and the Treasury Department on Tuesday released guidelines on how small businesses, including some hospitals and doctors, can access $ 349 billion in loans to offset losses from COVID-19.
Hospitals and independent doctors have been squeezed by delaying elective procedures and elective medical visits, struggling to obtain personal protective equipment and preparing for a possible increase in the number of critically ill patients.
Businesses and nonprofits with fewer than 500 employees are eligible for a grant of up to $ 10 million under the Small Business Paycheck Protection Program. The funds are intended to cover up to eight weeks of salary costs, including fringe benefits. Loans can also be used to pay interest on mortgages, rent, and utilities.
The SBA will have the discretion to determine whether a hospital that is part of a larger healthcare system is eligible for a loan.
“The membership rules are intended to determine whether the organization, taking into account ‘all the circumstances’, operates as part of a larger organization and therefore is not considered a small business, which will be assessed. case by case. “, according to an analysis by the American Hospital Association.
Modern Healthcare analysis of the 2017 and 2018 CMS cost reports found that only about 29% of acute care hospitals, 49% of critical access hospitals, and 16% of long-term care facilities with less than 500 employees reported operate independently of a health system. . Hospitals and systems report this data themselves.
The AHA estimated that 700 hospitals could be eligible to request $ 7 billion under the terms of the SBA loan, although the group said it could not take into account the exact circumstances of each member.
Loans can be canceled if companies use at least 75% of the money for salary costs, including retaining or rehiring employees quickly and maintaining salary levels. Salary costs are capped at $ 100,000 per employee on an annualized basis.
Small businesses can apply for loans from Friday to June 30. A list of participating suppliers and the loan request can be found on the Small Business Administration website. Loan repayments will be deferred for six months at a fixed interest rate of 0.5%.
“Speed is the key word; requests for emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans,” SBA administrator Jovita Carranza said in a statement. .
The stimulus bills would have prohibited nonprofits that received Medicaid funds from receiving small business loans, but the ban was removed from the final legislation.
The American Academy of Family Physicians had called for the provision to be removed so that independent physician offices could access funds to address cash flow issues related to appointment cancellations and COVID-19-related volume drops.
Numerous groups of liberal doctors, which are owned by doctors rather than a health system or other entity, have seen in-person visits drop 40% to 60% in recent weeks, as have hospitals and other providers . This decrease is only partially offset by virtual tours.
Tim Broderick contributed to this report.