How the care act helps home health agencies

These are difficult times for home health agencies and the nation as a whole. If you are looking for ways to keep your agency afloat there is a way to take advantage of the new government stimulus plan.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES) was signed by President Donald Trump, which officially enacted this legislation into law. The Coronavirus Aid, Relief and Economic Security Act’s purpose is to inject $2 trillion of financial capital into the U.S. economy to help businesses and individuals challenged by the financial nightmare caused by the onset of COVID-19.  The CARES Act helps small businesses by offering grants, loans, and credit programs.

The CARES Act has been designed to help in several ways. Small businesses can take advantage of this new legislation as it allocates about $350 billion in small business loans. So, if you are a small-sized home health agency who wants to take advantage of this money now being offered by the federal government, the time to act is NOW.

While $350 billion sounds like a lot of money (and to most it is!), the reality is that there will be many small businesses jockeying for a position to grab these funds from the SBA (7(a)) loan now available due to the enactment of CARES. Expressly, the CARES Act permits small business owners to borrow monies up to $10 million.

The Paycheck Protection Program (PPP) through CARES helps home health agency employers access funding for operating expenses and payroll. Specifically, it allows up to 250% of monthly payroll to be borrowed. The borrowed funds must be used within eight weeks for items like rent, payroll, or utilities.  

Eligibility for the PPP program is as follows:

• A business with less than 500 employees (part-time or otherwise).
• A business that complies with the size standard of the SBA.
• A sole proprietor
• An independent contractor
• A self-employed individual
• A 501(c)(3) with less than 500 employees
• A 501(c)(19) Veterans Organization that meets the size standard of the SBA.
• A Tribal business that meets the size standard of the SBA.

Additional special rules may apply regarding those in the food service and hospitality industries.

Example – If a home health agency’s payroll is $50,000/month, the agency would be eligible for up to 250% of $50,000 or $125,000. 

Here is a simple plan to follow if you are interested in applying for these unsecured SBA monies created by the enactment of the CARES Act. 

• Find a trusted lender who is an SBA partner. Preferred Lending Partners of the SBA have the authority to manage the funding process in-house – from underwriting to funding. Here is a link to the 100 most active SBA 7(a) lending institutions. 
• Find a trusted lender who works digitally/online as it is essential to start and complete this SBA loan process as quickly as possible – before the earmarked $350 million is gone.
• Note – the anticipated turn-around time is 36 hours after the issuance of an approval.

The maximum interest rate is 4%, and the maximum term is 10 years. Payments can be deferred for up to one year.

The Take-Away:

The CARES Act is an essential piece of legislation to help temper and support a struggling economy during the COVID-19 virus outbreak. The capital, though, offered through the CARES Act still requires applicants to meet specific qualifications to be eligible for the funding.  

Remember, there is little time to waste, so begin gathering the financial and operational verification and documentation that will be needed for an underwriter to approve your CARES Act SBA 7(a) loan upon the first submission.