SNFs Can Capitalize on Up to $10M in Forgivable Loans for Payroll, Rent — But Window May Be Short

As part of the sweeping $2 trillion coronavirus stimulus package signed into federal law last week, the Small Business Administration will soon offer up to $10 million in fully forgivable loans to small businesses across all industries under its Paycheck Protection Program (PPP).

Skilled nursing facilities feeling the payroll or rent pinch can capitalize on these loans along with other businesses facing cash-flow problems, but with federal officials still working to sort out the kinks — and high demand for the $349 billion in cash available — operators may need to pull together the necessary information quickly to take part in the program.

“We don’t know exactly how it’s going to play out. … Even though it’s a massive amount of money, it’s hard to gauge how quickly it’s going to go,” Adam Sherman, senior vice president and head of senior care at major SBA lender Live Oak Bank, told SNN.


Under the terms of the relief, businesses with fewer than 500 employees can access up to $10 million in SBA-backed loans. While the money can technically be used for any purpose, the federal government will fully forgive the portion of the loans put toward payroll, mortgage interest, rent, utilities — essentially most “keep-the-lights-on” functions, Sherman said.

“It’s a loan that’s designed to allow people to retain their workforce, and then assist with some of the operational expenses during the crisis time,” Sherman said. “The big hook, the big carrot on this particular program is that the loan is 100% forgivable if the business spends the money on the right things.”

Funds spent on all other purposes would be subject to 4% interest over a 10-year term, he said.


The SBA loans form another potential pillar of financial relief for the nation’s nursing homes and other small businesses; the Centers for Medicare & Medicaid Services (CMS) over this past weekend unveiled a plan that would allow operators to receive up to three months’ worth of Medicare payments in advance to help them weather the financial disruption caused by COVID-19.

As of Tuesday, it was unclear when the SBA would begin processing applications, given predictable bureaucratic delays in finalizing the details of the complex relief program. The nearly $350 billion in available funds represents 10 years’ worth of normal 7(a) loans, the SBA’s flagship small-business lending program, Sherman said — all potentially set to be doled out in a matter of weeks.

“It’s a pretty staggering number when you put it in that perspective,” he said.

For the time being, operators should start culling the necessary documents, including detailed payroll records, while reaching out to potential lending partners; the exact amount of the loan depends on in-place payroll burdens, Sherman explained.

Interested providers should also prepare an airtight plan to document that the money was used to meet approved obligations to prevent any issues with receiving relief down the road.

That magic-wand forgiveness can also be jeopardized if operators lay off any employees after receiving the loan, as the program is designed to keep as many people working as possible during the crisis; providers must keep their full payroll intact for eight weeks in order to secure the forgiveness, according to the SBA.

“They’re not going to be restricted as to what they can use it for, but they’re certainly going to want to document that they spent that minimum amount on those items so they can apply for forgiveness,” Sherman said.

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