Despite rocky start, SBA loans expected to provide financial assistance to practices

Tags: SBA loans, PPP, Paycheck Protection Program, loan, EIDL, COVID-19

By Brian Justice

UPDATE: As of April 16, 2020, the Small Business Administration reports the funds for the PPP loans and EIDL advances have run out. Congress is considering appropriating another $2.5 billion so for now, the program is suspended. We will let you know as soon as we know more.

The devastating economic impact of the coronavirus pandemic is being felt by medical practices across the country, but help is supposed to be available through the Coronavirus Aid, Relief and Economic Security Act (CARES) for small businesses. The Small Business Administration will oversee the distribution of millions of dollars in grants and loans through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Grants to help small businesses, like your practice.

The initiative has had a rocky start. Many outlets report that it could be a week or more before the system is fully functioning, and some banks have already capped their participation. The Federal Reserve has announced it will finance the loans, so the process should begin to smooth out soon. Given the large volume of expected applicants, physician practices hoping to secure SBA loans should act fast in contacting lending institutions.

Here is some basic information about the programs and simple how-tos for participating in them.

Paycheck Protection Program

The Paycheck Protection Program is a $350 billion loan program by the SBA for small businesses, the self-employed and gig workers to help them from going under due to the COVID-19 pandemic. The loan – the full principal and accrued interest – can be forgiven if the borrower uses the entire loan for forgivable purposes and compensation levels are maintained. However, no more than 25% of the loan forgiveness amount may be attributable to non-payroll costs and employers must maintain their payroll for duration of the crisis

Who is eligible?

  • Any business concern, nonprofit organization, veteran’s organization, or tribal business concern that employs no more than 500 employees
  • Sole proprietors
  • Independent contractors
  • Self-employed individuals

What is the process?

All current 7(a) lenders are eligible lenders. The Department of the Treasury is in the process of authorizing new lenders to help expedite the processing and delivery of the loans.

How to apply

You can apply through the SBA’s Lender Match Portal, and borrowers are also encouraged to contact a local 7(a) lender and ask whether they are participating in the PPP. Find a 7(a) lender here.

How much can I borrow?

The size of the loan is 250% of employer’s average monthly payroll cost between February 15, 2019 through June 30, 2019, with a cap of $10 million, at an interest rate of 1%.

For how long?

  • Two years
  • Payments are deferred for six months, but interest will accrue from the date of disbursement.

How can the loan be used?

  • Employee compensation, including:
    • salaries
    • wages
    • commissions or similar compensation
    • cash tips or equivalents
    • vacation, parental, family, medical or sick leave
    • payment required for providing healthcare benefits (including insurance premiums)
    • payment of retirement benefits
    • payroll taxes
  • Any compensation or income of a sole proprietor or independent contractor no greater than $100,000 in one year
  • Payment of interest on mortgage obligations, bed, utilities, and interest on pre-existing debt obligations

Questions about the Paycheck Protection Program may be directed to the Lender Relations Specialist in your local SBA field office, information for which is at

EIDL Grants

What is an Economic Injury Disaster Loan (EIDL)?

An Economic Injury Disaster Loan is a low interest, fixed rate loan that can provide up to $2 million in assistance for small businesses that can be used to pay immediate expenses during emergency.

What is an EIDL Grant?

They CARES Act created a new $10 billion grant program, leveraging the SBA’s Office of Disaster Assistance Infrastructure, to provide small businesses with quick, much needed capital.

Who is eligible?

  • Private nonprofit organizations and small agricultural cooperatives
  • Businesses, cooperatives, and tribal business concerns with 500 or fewer employees
  • Independent contractors
  • Sole proprietors (whether self-employed or not)

What is the process?

  • Eligible applicants who apply for an EIDL can request an advance payment of up to $10,000. These funds will be disbursed within three days of the application and they do not have to be repaid.
  • EIDL borrowers may also apply for the Paycheck Protection Program, but the Economic Injury Disaster Advance Loan will be taken into consideration when determining loan forgiveness.

How to apply

  • SBA portal
  • Download the PDF application on the SBA website and mail in the forms.

How much?

Up to $2 million with a $10,000 advance

How can it be used?

  • Any allowable purpose under the EIDL program.
  • Provide paid sick leave, maintain payroll, and meet increased costs.
  • Make rent or mortgage payments, and unmet obligations.

1 Comment

  • Adam S. Miner MD said

    SBA site and forms both simple, and confusing. Doesn’t ask for much, but not truly clear about what it does ask. At the end it asks for many support documents, but limited size to 5Mb per doc, many of the required documents were too big to attach! We changed and sent only first few pages, let them contact us for more.
    Also it is unclear, can you apply for the Emergency $ 10,000, while applying for the SBA forgivable loan? Both? Also, the terms for Forgiveness are clear.....but no where does it say how and when to REQUEST said forgiveness!!

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