COVID-19 Updates & Alerts 04/01/20

• In this edition of Covid-19 Alerts we are focusing our attention on the financial funding options available to businesses as a result of COVID-19 Emergency Declarations and new laws. Where available we have provided associated links to references and resources to support your research.
  • CMS Advance Payment Program (APP): Plan carefully to determine how this will impact future cash flows. It is a great short-term infusion, but it will be a take back on future EFTs as claims are processed. Below are a few of the particulars. https://www.cms.gov/files/document/Accelerated-and-Advanced-Payments-Fact-Sheet.pdf
    • Physician practices can request an advanced payment of up to 100% of the Medicare payment amount based on a three-month look-back period. Hospitals can request up to 100% (125% for critical access hospitals) based on a six-month look-back period.
    • Healthcare entities must make a request for an accelerated payment under the APP by submitting a form to their Medicare Administrative Contractor (MAC).
    • Once requested, CMS anticipates MACs will issue payment within seven calendar days from the request.
    • You must meet the eligibility requirements noted in the fact sheet.
    • APP payments are subject to repayment which appears to begin for most at 120 days after receipt.
      

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  • SBA Economic Injury Disaster Loan (EIDL):  The Coronavirus Preparedness and Response Supplemental Appropriations Act ; https://disasterloan.sba.gov/ela/
    • The SBA is offering designated states and territories low-interest federal disaster loans to small businesses suffering substantial economic harm as a result of the Coronavirus.
    • These loans may be used by small businesses to pay fixed debts, payroll, accounts payable and additional bills that can’t be paid because of COVID-19’s impact. The interest rate is 3.75% for small businesses without other available means of credit. The interest rate for non-profits is 2.75%. Original information states businesses with credit available elsewhere are not eligible.
    • The SBA loans come with long-term repayments, up to a maximum of 30 years. Loan terms are determined on a case-by-case basis, according to individual borrower’s ability to repay.
    • These loans are unsecured up to 25K, business can be less than 1 year old, no loan processing fees, and currently no loan forgiveness parameters defined. It originates directly from SBA in online application and current turnaround times are touted as 3-6 weeks.
    • The SBA has amended its disaster loan criteria to help borrowers still paying back SBA loans from previous disasters. By making this change, deferments through December 31, 2020, will be automatic. Therefore, borrowers of home and business disaster loans do not have to contact SBA to request deferment.
  • SBA EIDL Advance – as part of the CARES Act. The SBA is now authorized to issue a bridge loan through an expedited release process to first determine eligibility for an EIDL and to issue the advance immediately upon application. - https://covid19relief.sba.gov/#/
    • These “loans” are issued by the SBA. The expedited application process takes approximately 15-20 minutes to complete and asks for the following information:
      • Business Name, Tax ID #, and address.
      • 12 months gross revenues ending January 31, 2020 and any associated cost of goods sold for that period.
      • All owners personal identification information and ownership percentage.
      • Bank account information where funds are to be deposited
      • A series of qualification questions.
    • Awards will be up to $10,000. Turnaround time is mandated by legislation at 3 days.
    • Advance is either considered part of overall loan proceeds or forgiven if the application is subsequently denied.
    • It must be used for paid sick leave, maintaining payroll, increased costs to obtain materials, rent, mortgage payments, and repaying obligations that cannot be met due to loss of revenue.
    • If you applied for the EDIL before March 29 you will need to reapply for the Advance.
  • SBA Express Bridge Loans:
    • Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be term loans or used to bridge the gap while applying for a SBA EIDL. If a small business has an urgent need for cash while waiting for decision and disbursement on EIDL, they may qualify for an SBA Express Disaster Bridge Loan.
    • Terms include up to $25,000 with fast turnaround, which will be repaid in full or in part by proceeds from the EIDL loan.
    • Issued through a bank. Contact your Lender or find an Express Bridge Loan Lender via by connecting with your local SBA District Office. https://www.sba.gov/local-assistance/find/?type=SBA%20District%20Office&pageNumber=1
  • Small Business Loan Provisions of the CARES Title 1- Keeping American Workers Paid and Employed Act (also known as the Paycheck Protection Program (PPP):
    • Qualified SBA lenders (bank/credit unions) would be able to loan money directly to eligible customers, who can apply for loans directly through those lenders. These loans are 100% federally guaranteed.
    • Applies to loans made to employers of 500 or fewer employees during the “covered period” beginning on February 15, 2020 and ending on June 30, 2020.
    • The general formula which applies to most employers for purpose of calculating the maximum amount of the loan is as follows:
      • The maximum loan amount shall be the lesser of:
        • the average total monthly payroll costs incurred during the 1-year period before the date on which the loan is made multiplied by 2.5;OR
        • $10,000,000.
    • The amount of funds spent by borrower during an 8 week period after the origination date of the loan for payroll, health benefits, interest payments on mortgages originating prior to Feb 15, 2020, rents, and utilities will be
    • The borrower cannot have a pending application for a 7(a)loan for the same purpose. However, if you received an EIDL loan related to COVID-19 between Jan. 31 and the date at which a PPP loan became available, you would be able to refinance the EIDL into the PPP for loan forgiveness purposes. If you took advantage of an emergency EIDL Advance of up to $10,000 that amount would be subtracted from the amount forgiven under PPP.
    • Payment deferral offered for at least six months but possibly up to a year. Interest rates up to a max of 4%. The term will be up to 10 years. Turnaround time expected to be about two weeks.
    • Senate Committee Guide: https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act
    • Summary of Bill: https://www.congress.gov/bill/116th-congress/senate-bill/3548
  • SBA Community Block Development Grants:
    • SBA grants access to use grant dollars as loans to support local clinics, hospitals, and nonprofits effected.
    • Must contact local SBA office to determine if any are available in your area and what specific terms exist. https://www.sba.gov/local-assistance
  • Traditional Lending Alternatives:
    • Obtain a working capital line of credit from your local lender.
    • Consider using short term credit card solutions if the need is not significant and can be repaid quickly.

Disclaimer: V2V Management Solutions is a healthcare consulting firm. We are not licensed attorney’s or certified public accountants. This guide is not intended to replace legal or financial advice from your trusted resources. Before acting on any information provided check with the appropriate legal or financial team. This situation is a constantly evolving landscape be sure to research for most current information.The following content consists of key takeaways on information published in the above referenced articles, facts sheets, and our personal/professional experiences in financial management throughout a crisis.