On October 8, 2020, CMS issued a Press Release announcing that COVID-19 Provider Relief Funds (“PRF”) could be used to repay obligations incurred because of the Accelerated and Advance Payment program. We have received numerous inquiries regarding this potential use of PRF.
The following day, October 9, 2020, the Department of Health and Human Services updated its Press Release and included the following FAQ:
“Can providers use Provider Relief Fund distributions to repay payments made under the CMS Accelerated and Advance Payment (AAP) Program? (Added 10/9/2020) No, this is not a permissible use of Provider Relief Fund payments.”
WHEN MUST PROVIDERS SUBMIT THEIR APPLICATION FOR PPP LOAN FORGIVENESS?
Many healthcare providers secured PPP loans in 2020, many are securing PPP loans now, either as Phase 1 or Phase 2 loans. Remember, a loan forgiveness application may be submitted any time before the maturity date of the loan, which is either two (2) or five (5) years from loan origination.
However, if a borrower does not apply for loan forgiveness within ten (10) months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred, and the borrower must begin making payments on the loan. For example, a borrower whose covered period ends on October 30, 2020 has until August 30, 2021 to apply for forgiveness before loan repayment begins.
The Small Business Administration (SBA) released a slew of PPP guidance and updates on January 20, 2021, including the new simplified, one-page application for borrowers of loans for $150,000 or less – Form 3508S. Before the program reopened that threshold covered about 4.6 million of the program’s total 5.2 million loans.
PROVIDER RELIEF FUND (“PRF”) REPORTING DELAYED
As expected, the U.S. Department of Health and Human Services has announced that the February 15, 2021 reporting date for the use of PRF through December 31, 2020 has been delayed. The date never appeared reasonable as most healthcare providers would not have sufficient time to capture all the information to be reported by February 15, 2021.