Article updated April 3, 2020.
On March 27, President Trump signed into law the CARES (Coronavirus Aid, Relief and Economic Security) Act, which provides federal funds to individuals and businesses affected by the COVID-19 pandemic. The American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS) is now urging otolaryngology practices to take advantage of the loans offered as part of the law.
The Paycheck Protection Program includes $349 billion meant to help small businesses keep their employees during the COVID-19 crisis. Businesses with 500 employees or fewer are eligible to apply through an a bank approved by the Small Business Administration, according to the U.S. Small Business Administration. (Click here to find a bank.) The program will start accepting applications on April 3 and will be available through June 30, 2020. Practices that have already dismissed or furloughed staff are eligible for the loan if they rehire staff by June 1, 2020.
“I recommend that you contact your local SBA approved bank and begin applications for these loans immediately,” said James C. Denneny, MD, executive vice president and CEO of the AAO-HNS, in a letter posted on the organization’s website. “They are funded on a first-come, first-served basis and once the $350 billion is expended, additional funds will need to be appropriated.”
The loan may be used to cover eight weeks of payroll costs, as well as mortgage interest, rent, and utilities, according to the U.S. SBA. It will be fully forgiven if at least 75% of the funds are used for payroll costs. If not, loan payments may be deferred for six months. The loan matures at two years and has a 1% interest rate. Payroll costs are capped at $100,000 on an annual basis for each employee.
Jonathan Lara, DO, of Arizona-based Sonoran ENT, said he and his partner have already submitted an application for the Paycheck Protection Program. Starting in mid-March, they decided that their two-location practice would only see patients with urgent or semi-urgent needs in order to help slow the spread of the novel coronavirus. While a typical case load for their practice includes 30 to 40 patients a day, they are now only seeing about six to 10 patients a day. A few of these visits are happening via telemedicine.
“Going into medical school, one of the things I always thought was that medicine was immune to everything, but this crisis has cut practices down to half to zero percent of productivity, which, truthfully, I never thought would happen,” he said.
Dr. Lara said that for his 24-employee practice, they applied for the maximum loan, which is 250% of average monthly payroll costs. He estimates the practice has enough cash to cover costs through mid May. After that, they’d need the loan to keep going.
He advices other practices to apply for the program as soon as possible. Dr. Lara also warned that banks may not be up to speed on the details of the program so be prepared to spend time digging through the SBA website for information.
“As a doctor, you deal with things like life-threatening issues, but when I have to take care of staff and their families it becomes a pressure I’ve never felt before,” he said.