ACG members are working admirably on the front lines of this COVID-19 crisis. We are also dealing with this crisis as small business owners, employing many residents in our communities. The $2 trillion CARES Act sets up lending programs administered through the Small Business Administration (SBA) as well as the Centers for Medicare and Medicaid Services (CMS). While the regulatory guidance is still trickling out, these loan application windows are starting to open. This obviously lends to a lot of confusion out there, not only for independent GI practices, but all small business owners across the country. Please find below a brief summary of some of these programs available to GI practices and suggestions on how to get started in accessing much needed financial relief.
There are three components of the CARES Act that I will initially focus on:
Paycheck Protection Program (PPP): This is a loan through the SBA which provides an immediate cash infusion into your practice based on your prior payroll history. It is focused on preservation of your payroll and employee benefits. Much, if not all, of this funding may be also forgiven as long as you can document the use of the money for the proper items and maintaining staff.
Emergency Economic Injury Disaster Loans (EIDL): This SBA program provides small businesses with working capital loans of up to $2 million. Please note that these loans, unlike the PPP, cannot be forgiven.
Click here to learn more about the SBA’s Economic Injury Disaster Loan Program.
Economic Injury Disaster Loan Emergency Advance: This SBA loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
Click here for some background on the EIDL Emergency Advance Program.
Medicare Advanced Payment Program: As is noted in the name, this program is strictly administered through CMS. The basic premise is that you present a 3-month estimate of your typical earnings based on historic information. Medicare pays you this sum in advance. Your practice then debits off the sum owed to CMS over a period of time.
CMS has provided some guidance, as well as instructions, on how to apply for this program. Click here to read more.
HOW DO WE START THIS COMPLICATED LOAN PROCESS?
Much like the U.S. home mortgage market, the SBA doesn’t make small business loans directly. It works with lenders that do offer small business loans, guaranteeing a portion of the loan. This acts as an insurance policy for the lender, which encourages them to make more loans to eligible businesses. Your current bank and lending institution may be SBA-certified. Start there.
Contact your lender as soon as possible to find out if they are SBA-certified and are participating in the PPP or EIDL programs. Remember, these institutions may be responsible for your financial start-up and helped in your success before this crisis. These institutions may also have a vested interest in your continued solvency and success. You’ll want to acknowledge this and show your appreciation for the relationship forged over the years. If your bank does not participate in SBA loans, you should ask them for a reliable reference. These SBA-approved institutions will give you a list of items that you will need to start assembling, including corporate and tax/financial information. Thus, you need to immediately contact your attorney and accountant in order to start gathering these documents as well. Lastly, these are massive programs that are being implemented as quickly as possible. Expect a lot of chaos and confusion among your lenders. They are just getting their regulatory guidance as well.
Please do your due diligence now, even if you’re unsure whether you need or qualify for these programs. The future of many of our independent GI practices is uncertain, but together we will get through these times.
–Caroll Koscheski, MD, FACG