Home care agencies navigating financial headwinds associated with the COVID-19 virus can seek relief through the Paycheck Protection Program (PPP).
But providers need to approach PPP with a full understanding of how the funds can be utilized — or risk consequences down the line.
Broadly, PPP — a flexible loan program for certain small businesses — was created via the Coronavirus Aid, Relief and Economic Security (CARES) Act. Initially, the lawmakers allocated $350 million for the program.
Due to soaring demand, that initial pool of PPP money quickly ran out, however. On Friday, President Donald Trump signed new legislation providing an additional $484 billion in coronavirus relief, including another $310 billion in funding for PPP.
“I want to thank Congress for answering my call to pass this critical funding,” Trump said Friday during a signing ceremony in the Oval Office, noting that PPP is “great for small businesses” and “great for the workers.”
Home care industry insiders discussed PPP during a Friday webinar hosted by CareAcademy, a Boston-based training platform for home care professionals.
Understanding the ins and outs of the PPP is especially important for home care, a segment mostly made up of small businesses and mission-driven, mom-and-pop agencies. About 78% of home care providers employ fewer than 50 workers, according to recent statistics from PHI, a New York-based direct-care workforce advocacy organization.
After home care agencies apply for and receive funds from PPP, there are specific things they need to keep in mind.
“You can only use the funds for a limited amount of things,” Sara Ainsworth, an associate in the securities and corporate finance practice at law firm Polsinelli LLP, said during the webinar. “You can, for example, use [PPP money] for utilities, which include gas, water, electricity, transportation, internet access and telephone.”
Apart from direct COVID-19 costs, the funds can also be used on rent for leases that were in place before Feb. 15, mortgage interest payments and payroll expenses.
In order to maximize debt forgiveness, there needs to be a 3-to-1 ratio between payroll and non-payroll costs, according to Ainsworth.
“If you spend $100,000 in eight weeks, for example, $60,000 of that on payroll and $40,000 of that on non-payroll, then the $60,000 is eligible for forgiveness — but only $20,000 of non-payroll is eligible,” she said. “The government really wants everyone to focus on payroll.”
Still, the guidance on what will fall under debt forgiveness and what won’t remains unclear, Ainsworth cautioned.
“The rules were drafted very quickly,” she said. “I don’t [know if] everything was thought out all the way through. We are expecting that there will be more guidance on forgiveness because there are a lot of open questions here.”
One way the PPP funds are being utilized by home care agencies is to provide caregivers with hazard pay. Hazard pay is additional compensation for performing duties that are potentially dangerous to workers.
“Companies are using these funds to be able to increase an hourly rate at this time, providing a level of essential pay as well as other funding and programs to support caregiver retention,” Emma Dickison, CEO and president of Home Helpers, said during the webinar.
Cincinnati-based Home Helpers is an in-home care franchise company that has more than 300 locations around the country.
Along with her role at Home Helpers, Dickison serves as president of the Home Care Association of America’s (HCAOA) board of directors. HCAOA is a Washington, D.C.-based trade organization that represents nearly 3,000 home care companies.
While PPP can help providers offer hazard pay, some industry leaders believe the government needs to come up with a dedicated program for front-line workers.
“I would love to see something like government-supplemented hazard pay for health care workers dealing with COVID-19,” Interim HealthCare Inc. CEO Jennifer Sheets previously told Home Health Care News. “We need to incentivize people to be on the front line, especially in a pool that’s already prone to high turnover.”
During the CareAcademy, Ainsworth stressed the importance of using PPP funds within the parameters of the law.
“If you use the funds for anything other than what I said, it’s bigger than not receiving debt forgiveness — it’s a misuse of funds,” she said.