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Which Small Business Loan is Right for You?

Throughout the last few weeks, there has been an incredible amount of Small Business Relief set out by the Federal Government to impact those businesses that have been hit the hardest by the COVID-19 outbreak. Many of these small businesses include privately owned physician practices, which make up almost 50% of the healthcare business. With the delays in elective and specialty care, many of these practices are being forced to lay off employees, close offices and are in real danger of not being able to survive. So what loan options exist for these practices? We’ll break down the major loans and provide some important links to ensure your practice has the most up to date information (keep in mind that as you are reading this, things are changing).

Liftfund: Liftfund is a local nonprofit located in San Antonio. San Antonio and Bexar County are extremely lucky to have this organization which provides micro loans to small businesses that typically do not qualify for bank loans. Throughout this disaster, Liftfund is offering 0% interest loans to small businesses, operating in Bexar County. These are offered to small businesses, who have experienced a decrease in revenue by at least 15% because of COVID-19. They are offering two products: One through Bexar County up to $50,000 and one through Liftfund, up to $25,000. On line applications can be found at: https://www.liftfund.com/covid-19-loan/

Economic Injury Disaster Loan: This loan is provided by the Small Business Administration and the application is located on their website. This loan is offered to businesses to assist with operating expenses - the large benefit to this loan is the advance, issued within 3 days of a successful application. This advance can be up to $10,000 and will be forgiven. Although the advance is being offered within 3 days of a successful application, we are hearing that it is taking approximately a month to process applications. Additional funds will be processed later and will be provided at a rate of 3.75% for private and 2.75% for nonprofits. These loans will be offered for 30 year terms and payments are deferred for one year from date of the note. Online applications can be found at: https://covid19relief.sba.gov/#/

Paycheck Protection Program: The Paycheck Protection Program, or PPP, is aimed to provide funding for small businesses to cover their payroll and incentivize organizations to keep employees hired and paid throughout this crisis. The PPP loans are administered through banks, credit unions and SBA approved lenders. The loan is opening on April 3rd, but exact requirements will vary based on the bank used to apply. Through these loans, your company is eligible to receive 2.5 times the average monthly payroll, capped at $10 million. This loan is forgivable for funds that are used for payroll (as long as FTE counts remain the same throughout the period) and other expenses, such as rent, utilities, and health insurance coverage. The portions of these loans that are not forgivable will have a 0.5% fixed rate and payments are deferred for 6 months. Additional Information can be found at: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

Per the Small Business Administration on Friday, organizations are allowed to apply for loans through multiple sources, so long at they are not covering the same costs. For example, if an organization applies for the PPP loan to cover payroll, they are not allowed to also apply for the EIDL loan for payroll costs. However, they could apply for the PPP and EIDL if each are funding different expenses. Outside of these loans, there are tax credit opportunities that can provide some long term assistance. Currently, if your company opts out of the PPP and continue to pay employees during the shutdown, the company is eligible for a 1 year credit against the employer’s 6.2% share of Social Security payroll taxes. The rules and regulations on these loans are changing daily and we are keeping on top of everything. Nolan HCS is here to support you and your practice in whatever way we can.

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