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Information on the Coronavirus Aid, Relief and Economic Security (CARES) Act

Date: 04/13/20

The Coronavirus Aid, Relief and Economic Security (CARES) Act was approved by the U.S Congress and signed into law on March 27, 2020. The CARES Act has created and expanded a few different loan programs that may be an option to assist your practice during the coronavirus (COVID-19) pandemic.

Payment Protection Program

The Paycheck Protection Program authorizes $349 billion in no-fee small business loans. Eligible applicants include non-profit and for-profit businesses with fewer than 500 employees, or be no larger than "the size standard in number of employees established by the Administration for the industry in which the business concern, nonprofit organization or veteran’s organization operates.” This includes the self-employed and those that receive Medicaid funding. 

These no-fee small business loans cover qualified payroll costs, rent, utilities, interest on mortgage and other debt obligations. Businesses can borrow 2.5 times their monthly payroll expenses, up to $10 million. The initial loan rate has been set at 0.5%, but the CARES Act caps the interest rate at 4%. It is possible that the interest rate could increase. Please note: These loans cannot cover payroll costs for salaries in excess of $100,000.

The program includes loan forgiveness, covering costs for the first eight weeks of the loan for companies able to keep employees on payroll, or continue paying bills throughout the COVID-19 crisis.

How to Apply for the Payment Protection Program

Businesses can start the application process and learn more from their bank or an approved lending institution. Loans are available through December 31, 2020.

the size standard in number of employees established by the Administration for the industry in which the business concern, nonprofit organization or veteran’s organization operates.” 

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Economic Injury Disaster Loan

The CARES Act also expands eligibility for borrowers applying for an Emergency Economic Injury Disaster Loan (EIDL) Grant. Eligible applicants include non-profit and for-profit businesses or cooperatives with fewer than 500 employees, sole proprietors or independent contractors, or Employee Stock Ownership Plans (ESOPs) with fewer than 500 employees.

These loans can be used for payroll costs, increased material costs, rent or mortgage payments, or for repaying obligations that cannot be met due to revenue losses. Loans up to $2 million are available. Borrowers may receive a $10,000 emergency advance within three days after applying for an EIDL. Even if the application is denied, the applicant is not required to repay the $10,000 advance.

The CARES Act waives the requirements that:

  • The borrower provider a personal guarantee for loans up to $200,000.
  • The eligible business be in operation for one year prior to the disaster.
  • The borrower is unable to obtain credit elsewhere.

How to Apply for the Economic Injury Disaster Loan

Apply directly to the U.S. Small Business Administration (SBA). The SBA will disburse the funds within five days of receiving the executed loan-closing documents.

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Additional Resources

Detailed information about and applications for the Payment Protection Program and Economic Injury Disaster Loan can be found on the SBA Coronavirus (COVID-19): Small Business Guidance & Loan Resources webpage. Additional information can also be found at the resources below.

Additional COVID-19 news, guidance and resources for providers can be found on the Foster Care Texas Coronavirus Updates webpage.