Paycheck Protection Program: A Potential Lifeline for Physician Practices

April 1, 2020

With the COVID-19 pandemic, physician and other medical offices have seen downturns in revenue as they modify their practices amid changes. On March 27, 2020, the U.S. House of Representatives and Senate came together to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One provision of this act was the establishment of the Paycheck Protection Program (PPP).

A total of $349 billion was allocated to the PPP. Business owners with fewer than 500 employees are eligible to apply for a forgivable loan. A private equity funded practice will need to satisfy an affiliation rule contingent upon the private equity firm’s ownership percentage in the practice. The application can be found using this link, which states that the maximum loan amount (up to $10 million) is 2.5 times a business’s average monthly payroll, where “payroll costs are capped at $100,000 on an annualized basis for each employee.”[1] Loans through the PPP will be forgiven if employee and compensation levels are maintained and the loan proceeds are used to cover payroll, mortgage interest, rent, and utility costs in the eight weeks following receipt of loan proceeds subject to specific criteria being met.[2] In cases where these stipulations are not followed, loan repayment terms include a maximum term of two years and a maximum interest rate of 1%.[3]

How to Apply

Below are general steps to apply for PPP funds, but are no substitute for legal advice:

  1. Applications start on April 3, 2020 for small businesses and sole proprietorships and on April 10, 2020 for independent contractors and self-employed individuals. Given the funding cap, it is advisable to apply as early as possible.
  2. Apply with any participating SBA 7(a) lender, federally insured depository institution, federally insured credit union, and farm credit system institution. The institution where a business banks is preferable.
  3. Calculate average monthly eligible payroll in accordance with the PPP guidelines.
  4. Identify the number of employees in your practice.
  5. Identify the owners of the medical practice (including any private equity firms) and apply the tests for affiliation in order to determine total number of employees.

For more information on the Paycheck Protection Program and assistance on completing the applications, we encourage you to contact one of our experts today.

Don Crawford, Partner


Robert Holland, Director


The information provided herein is accurate as of the date of entry and relies on data available at the time of writing. Given the rapidly changing environment, the information provided is intended as a resource only and should not replace direct consultation of relevant laws, policies, and guidelines. HMS Valuation Partners is committed to ensuring that clients have accurate and up-to-date information and is closely monitoring any changes in policy and practice relevant to COVID-19.


[1] “Paycheck Protection Program (PPP) Information Sheet: Borrowers.” U.S. Department of the Treasury.–Fact-Sheet.pdf. 22 April 2020.

[2] Id.

[3] Id.

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