On Friday, President Donald Trump\u2019s signature finalized a record-breaking $2 trillion stimulus package, officially titled the Coronavirus Aid, Relief and Economic Security (CARES) Act. The act\u2019s aim: to provide much needed financial relief to both individuals and businesses during the COVID-19 crisis.
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While the CARES Act does a number of things, it specifically sets aside an estimated $350 billion for small businesses in the form of loans. If home-based care agencies wish to capitalize on those resources, they need to act quickly, financial experts warn.
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Once the $350 billion is gone \u2014 it\u2019s gone for good.
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With that in mind, providers in need of relief should put their wheels into motion now, Shep Harris, a loan officer at Live Oak Bank, told Home Health Care News.
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\u201cMy opinion is that it\u2019ll be kind of first come, first serve,\u201d Harris said. \u201cNow, will they step up and sign something else if there\u2019s a long list thereafter? Who knows. But I wouldn\u2019t want to be on that side of the [things]. I wouldn\u2019t want to take that risk.\u201d
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Wilmington, North Carolina-based Live Oak Bank is one of the lenders that the government leaned on when writing the bill in the first place. The bank specializes in facilitating business loans guaranteed by the Small Business Administration (SBA) to companies in various industries, including senior care and health care.
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Under the CARES Act, small businesses are allowed to borrow up to $10 million.
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If they\u2019re looking for payroll relief, the Paycheck Protection Program (PPP) allows an agency to borrow up to 250% of their monthly payroll. For example, if a company has $100,000 in average payroll costs per month, it would be eligible to receive a $250,000 loan.
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The small business owner must deploy any capital they receive within eight weeks to appropriate causes, such as payroll, rent and utilities.
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The PPP\u2019s goal is to provide needed cash-flow assistance through the loans \u2014 which are 100% federally guaranteed \u2014 to providers that maintain their payroll during the crisis. If they do so through June, the loans could even be forgiven.
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Harris laid out a specific process for home care agencies and other small businesses to follow to better secure a loan. Here are his three key takeaways:<\/p>\n\n\n\n
1. Find a lender that is a preferred lending partner of the SBA, which is referred to as a Preferred Lending Partner (PLP).<\/strong> \u201c[Those] banks have the ability to underwrite, approve and fund in-house,\u201d Harris said. \u201cThey don\u2019t have to go to a second level of approval through SBA. Banks \u2026 that don\u2019t have SBA presence, [they] don\u2019t have that PLP status. And that will crush your timeline with respect to how long it takes to get the capital in the hands of the small business owner.\u201d 2. Find a smaller lender.<\/strong> \u201cFind a lender that is small enough to be nimble and agile. [There] are a lot less requirements \u2014 with respect to what\u2019s required for this program \u2014 from an underwriting perspective [for smaller banks],\u201d Harris said. \u201cCan a bank adjust its entire procedures from a lending, underwriting and funding [standpoint]? Or do they have their normal set of operations that includes 100 things that they need to do? It will take them so long to put things in order \u2014 for a large or much larger organization \u2014 to figure that out. [Then] weeks have gone by, and other people are being funded first.\u201d 3. Don\u2019t worry about pre-existing banking relationships; do worry about digital capability.<\/strong> \u201clt really doesn\u2019t matter whether you have a banking relationship or an existing lending relationship with a specific bank today,\u201d he said. \u201c[You] want to work with someone that is quick, so banks that have a digital presence. Because all of the financial information and all of this stuff being submitted to the SBA on the back-end is being done digitally. Banks that are pretty competent and have a larger digital presence probably will be the most efficient and the quickest to get capital into the hands of borrowers.\u201d Once the right bank is identified, small businesses will need to begin gathering all the necessary items for the application process, such as its 2019 profit and loss statements, payroll cost over and IRS forms, among other details.<\/p>\n","protected":false},"excerpt":{"rendered":" On Friday, President Donald Trump\u2019s signature finalized a record-breaking $2 trillion stimulus package, officially titled […]<\/p>\n","protected":false},"author":3,"featured_media":26948,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_uag_custom_page_level_css":"","_uf_show_specific_survey":0,"_uf_disable_surveys":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[14,189,113,159,165,178],"tags":[],"class_list":["post-26820","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-covid-19-coronavirus","category-legislation","category-telehealth","category-telemedicine","category-virtual-exam-and-virtual-care"],"acf":[],"yoast_head":"\n
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