President Signs Off on Paycheck Protection Program Extension

Small healthcare providers can still apply for a Paycheck Protection Program loan, according to a new law signed by the president over the holiday weekend.

On July 4, 2020, the White House announced that President Trump signed S. 4116, a bill unanimously passed by both the House of Representatives and Senate last week to reauthorize the Paycheck Protection Program through August 8, 2020.

The new law will also separate the authorized limits for commitments under the program from other Small Business Administration loan programs, the White House reported.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Paycheck Protection Program, which offers potentially forgivable loans to organizations with fewer than 500 total employees, including physician practices and hospitals, to help keep employees on payroll during the COVID-19 crisis.

Small businesses can apply to the program for loans of up to $10 million. The Small Business Administration will fully forgive the loans if at least 60 percent of the loan goes to payroll expenses, among other criteria.

The original deadline to apply to the Paycheck Protection Program was June 30, 2020. At that time, the Small Business Administration had approved over 4.8 million applications for a total of more than $520 billion in loans.

The average size of the loan on June 30, 2020, was $107,199, the Small Business Administration reported.

But that meant about $130 billion still remained in the fund, out of the total $660 billion allocated to the program by lawmakers, NPR recently reported.

The new law will enable small businesses to collect the remaining funds as the COVID-19 pandemic continues to upset financial performance.

“When Congress passed the CARES Act in March, we thought that small businesses would be operational by the end of June, but it is now clear that our nation’s small businesses will still need support in the weeks and months to come,” Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-MD) stated in a press release.

The Paycheck Protection Program has been a critical lifeline for small healthcare providers struggling to stay afloat during the public health emergency that turned into an economic crisis.

About 38 percent of primary care practices responding to a survey conducted by the Primary Care Collaborative and The Larry A. Green Center in late May said they received help from the Paycheck Protection Program.

Yet, 37 percent of clinicians responding to an updated survey last week reported new layoffs and furloughs; 28 percent of said they have skipped or deferred salaries.

New research from Harvard Medical School and American Board of Family Medicine showed that primary care practices are slated to lose $15 billion as a result of the effects of COVID-19, including reduced visit volumes and reimbursements.

Practices could incur more substantial financial losses though if the country has to implement additional shelter-in-place orders later this year or if payers revert to lower telehealth reimbursement rates, researchers warned.

“For many primary care practices, particularly those serving the most vulnerable populations, these losses could be catastrophic, with many practices being forced to close,” said study author Sanjay Basu, director of research and population health at Collective Health and a faculty affiliate in the Harvard Medical School Center for Primary Care. “This could weaken the US health system dramatically at a time when we need it to be at its strongest.”

Hospitals are also suffering from dramatic revenue losses. The American Hospital Association (AHA) recently projected hospitals to lose over $323 billion by the end of the year due to coronavirus-related expenses.

The Paycheck Protection Program has supported many small healthcare providers during the first half of the year. Flexibilities granted to loan recipients by a bill signed into law on June 5, 2020, also made it easier for small businesses to get the loans forgiven.

However, some healthcare groups have complained that the program is too limited in scope to save some essential providers.

For example, medical groups organized as one entity but with multiple locations, each with fewer than 500 employees, have not been able to access the much-needed financial resource, the American Medical Group Association (AMGA) stated.

“The irony of the situation is that as our members are retooling to respond to the unprecedented challenge presented by COVID-19, they simultaneously need to lay off staff to continue operations. Cleary, this is an untenable situation,” AMGA told the Department of Treasury earlier this year.

Additional Paycheck Protection Program flexibilities are on the negotiating table right now but would not address AMGA’s concerns.

Senators Cardin, Jeanne Shaheen (D-NH), and Chris Coons (D-DE) recently introduced the Prioritized Paycheck Protection Program (P4) Act to authorize new lending under the program to small businesses with 100 employees or less. The legislation would also prevent affiliated businesses with separate locations from receiving over $2 million in aggregate loans under the updated program.