U.S. SBA Releases Additional Guidance Relevant to Government Owned Hospitals

April 24, 2020

On April 24, 2020, the U.S. Small Business Administration (SBA) codified a newly enacted Frequently Asked Question (FAQ) into a previous version of its Interim Final Rule on the Paycheck Protection Program (PPP) under in the Coronavirus Aid, Relief, and Economics Security Act (CARES Act). The new FAQ clarifies that government owned hospital entities are eligible for the PPP as follows:

Is a hospital owned by governmental entities eligible for a PPP loan?

A hospital that is otherwise eligible to receive a PPP loan as a business concern or nonprofit organization (described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code) shall not be rendered ineligible for a PPP loan due to ownership by a state or local government if the hospital receives less than 50% of its funding from state or local government sources, exclusive of Medicaid. The Administrator, in consultation with the Secretary, determined that this exception to the general ineligibility of government-owned entities, 13 CFR 120.110(j), is appropriate to effectuate the purposes of the CARES Act.

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