LeadingAge Calls for New Funds, Expanded Eligibility for Paycheck Protection Program

Legislation | April 16, 2020 | by Brendan Flinn

Paycheck Protection Program funds were fully disbursed as of April 16. In this article, LeadingAge outlines next steps for the program, including the need both for new funds and changes to eligiblity that would allow more not-for-profit aging services providers to participate.

The March 27 CARES Act provided a crucial source of support for small entities across the country in the form of the Paycheck Protection Program, a $350 billion forgivable loan program designed to cover payroll and other expenses for small businesses, certain not-for-profits and independent workers. There has been intense demand for these funds over the last several weeks, and on April 16 the Small Business Administration (SBA) announced that the entire $350 billion allocation has been committed to small entities across the country.

Policymakers in Congress and the Administration generally support appropriating new funds for the PPP, however there is currently debate over how to do so and whether the program needs programmatic changes in addition to more money.

Many not-for-profit aging services providers have been able to access the Paycheck Protection Program. Not-for-profit organizations that are registered as 501(c)(3) organizations and have 500 or fewer employees were eligible for these loans. While the full scope of which entities were funded through PPP, we know that at least some nursing homes, hospices and home and community-based services providers received loans.

PPP funds have the ability to support aging services providers who have experienced the impact of COVID-19 in different ways. Nursing homes and in-home service providers across the country are on the frontlines of combatting COVID-19, and many have incurred new expenses as a result of increased staffing needs. Other aging services, like adult day services providers, have closed their doors to stop the spread of COVID-19 among people who live in their homes and receive community-based services. In doing so, these providers lost almost all of their revenue and need the financial support PPP offers to maintain their payroll.

Increasing funds for PPP would allow more aging services providers to access these crucial funds. At the same time, some changes may be needed to ensure all aging services providers are eligible to participate.

For 501(c)(3) not-for-profit organizations, PPP is generally limited to organizations with 500 or fewer total employees. And, PPP applies SBA affiliation rules to the employee count. If an organization owns multiple nursing homes, other residential communities and/or HCBS, it may not be eligible for PPP if its total employee count across those locations exceeds 500, even if individual sites have fewer than 500 employees each.

This provision has limited which types of aging services providers can participate and has prevented key providers from receiving funds. In the first round of PPP funds, Congress exempted the hotel and restaurant industries from the affiliation rules, allowing large chains of both types to receive loans. Future appropriations for PPP should do the same for aging services providers.

Specifically, Congress exempted hotels and restaurants from the affiliation rules by exempting industries classified as section 72 (Accommodation and Food Services) under the North American Industry Classification System (NAICS). Congress could create a similar exemption for aging services by exempting industries classified under the NAICS as sections 6216 (home health care services), 623 (nursing and residential care facilities, including CCRCs and assisted living) and 62412 (services for the elderly and persons with disabilities, including most HCBS and PACE). In addition, Congress should also exempt not-for-profit affordable housing organizations (NAICS codes 531110 and 531311). Such exemptions would maintain the integrity of PPP’s mission while extending the availability of funds to critical aging services providers across the country.

LeadingAge will advocate both for more money to be appropriated to PPP, and for PPP to be even more inclusive of not-for-profit aging services providers.