On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.
The new law provides $2.2 trillion in various forms of economic relief, including direct assistance to medical providers and two new US Small Business Administration (SBA) loan programs to assist small businesses, including ASCs.
Direct Cash Payments to Medical Providers
The direct relief provided by the new law will be administered through a $100 billion public health and social services emergency fund that is intended to reimburse medical providers for expenses or lost revenue attributable to the COVID-19 pandemic.
There are very few details about the program available at this time, but CMS is expected to make additional announcements regarding the eligibility and application process in the coming days. ASCA will provide updates as more information becomes available.
Paycheck Protection Loan Program
The first of two new SBA loan programs is a $349 billion “paycheck protection program” that will provide loans to eligible businesses to cover the costs associated with up to eight weeks of payroll and employment benefits.
Qualified businesses can apply for loans up to $10 million at a 4% interest rate. However, the loan amounts can be forgiven if the loan proceeds are used to cover payroll costs, or mortgage interest, rent and utility costs over the eight-week period after the loan is made and employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee.
Loan payments will be deferred for eight months.
Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
This program is open to all small businesses, including ASCs, with 500 or fewer employees.
ASCA is seeking clarification from CMS regarding the eligibility of ASCs that are currently participating in joint ventures with hospitals and other health providers or have an affiliation with a management company that might otherwise disqualify them from participating.
For more information, see the Paycheck Protection Program (PPP) Information.
Economic Injury Disaster Loan (EIDL) Grant
There are two parts to the Economic Injury Disaster Loan program.
The first part is a small business loan program with the following terms:
- loans up to $2 million are available
- disaster loans come with low fixed interest rates of 3.75% or 2.75% for nonprofits
- repayment term is up to 30 years, reducing the monthly cash flow burden
- no prepayment penalties
- payment may be deferred for six months, although interest will accrue
- money is available in all 50 states
- time-in-business requirement has been waived, provided your business was operational on January 31, 2020
The second part of the program is a grant associated with the EIDL that makes it possible for any business that meets the minimum requirements to apply and receive $10,000 almost immediately (the SBA is shooting for three days) and use the funds without the requirement to repay the loan.
These working capital loans (including the grant) may be used only to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or to pay for expansion. Funds cannot be used to pay down long-term debt or to consolidate debt.
To apply for an EIDL loan grant, complete SBA's COVID-19 Economic Injury Disaster Loan Application.