How the Paycheck Protection Program can help your Hospital


When the Coronavirus Aid, Relief and Economic Security (CARES) Act was Paycheck Protection Program helping hospitalssigned into law on March 27, the news focused on the money to be sent to each American to help ease the financial impact of the COVID-19 crisis. But what about the businesses that are feeling the crunch? An important part of the CARES Act is the Paycheck Protection Program, which allocates nearly $350 billion to support emergency loans to qualifying businesses – including some hospitals and physicians, intended to help business keep their staff employed through these uncertain times.

This program, which is administered by the Small Business Administration, makes loans of up to $10 million available for organizations with less than 500 total employees (i.e., both full and part time). The money can be used for salaries and wages, leave and health benefits, rent, and/or retirement obligations, among other uses. For-profit and non-profit hospitals that meet the affiliation rules are eligible for these loans. Even more enticing, these loans may be forgivable if certain guidelines for use are met. The American Hospital Association estimated that 700 hospitals may be eligible to apply for $7 billion under the loan provisions.

According to a handy guide put together by the U.S. Chamber of Commerce, loans can be up to 2.5 times the borrower’s average monthly payroll costs that fall under the $10 million threshold. These costs can include:

♦  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 the employee

There are a few things this money can’t be used for. Annual salaries of $100,000 or more, payroll and income taxes, employees who live outside of the United States, and qualified sick leave wages that were allowed under the Families First Coronavirus Response Act, sections 7011 and 7033.

One of the most important aspects of the Payroll Protection Act for any business, but especially health care facilities, is the fact that borrowers are eligible for loan forgiveness if they use at least 75% of the money for payroll costs, including retaining or quickly rehiring employees and maintaining salary levels. Loan funds can also be used for other expenses, including mortgage, rent, and/or utilities.

Applications will be accepted between April 3 and June 30. You can find more information about the Paycheck Protection Program requirements and how to apply on the Small Business Administration website. In a recent Modern Healthcare article, SBA Administrator Jovita Carranza said, “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans.”

The Coronavirus is impacting us all. It is time to utilize the tools offered to ensure the strength of your staff during this difficult time.


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