PPP Funds Cast Financial Lifeline to Senior Living Providers During Covid-19

The Covid-19 pandemic has driven up expenses and dragged down revenue for smaller or single-site senior living providers who lack the cash reserves of their larger peers. For some providers, funds from the payroll protection program (PPP) have acted as a life preserver in turbulent times — but the long-term outlook remains hazy despite the help.

The PPP has directed hundreds of billions of dollars to businesses across the U.S. in the form of Small Business Administration (SBA) loans amounting to 250% of a company’s average monthly payroll costs and capped at $10 million. The initial $350 billion cash pool ran out just days after the program launched in April, prompting lawmakers to approve another $310 billion in funding.

Some of those dollars are flowing to small businesses, including those in the senior living industry. Chicago-based specialty investment bank Ziegler knows of 106 not-for-profit providers that have looked into the program, 93% of which applied for a loan under PPP. The average requested loan size from those providers was about $2.4 million.

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“It has been a tremendously popular program with just about everyone in our industry who qualifies,” Tommy Brewer, a managing director in Ziegler’s senior living finance practice, told Senior Housing News.

Providers that had an in-house infrastructure in place for doing payroll were among those more likely to receive funds through the program, as working with third-party service providers sometimes complicated the documentation process, Brewer added. And providers working with smaller banks were also more successful in getting the SBA loans, at least among the ones Ziegler tracked.

One of those providers was Chicago Methodist Senior Services (CMSS), a non-profit senior living provider with five small senior housing and care properties on Chicago’s north side. The organization applied for and received a $2.6 million PPP loan through Wintrust Financial to cover two and a half months of payroll. CMSS also received two grants from the U.S. Department of Health & Human Services totalling $156,000 and $22,000 apiece, according to Bill Lowe, the organization’s president and CEO.

“We’re fortunate that there have been some funds coming in to the rescue,” Lowe told SHN.

CMSS has so far reported 16 confirmed cases of Covid-19 in two of its buildings. The organization has encountered some challenges procuring personal protective equipment (PPE), and chose to enact temporary salary reductions ranging from 10% to 20% for some of its non-clinical staff who make more than $50,000 per year.

Though the road ahead looks fraught with challenges, CMSS was able to make ends meet for now thanks to that funding, and thanks to the hard work of its frontline associates, Lowe said. The provider also received assistance from some of the organizations it has linked up with over the years, such as the United Methodist Association, which helped CMSS access an order of protective gowns that had not come in.

“Earlier in my career, I really didn’t appreciate the value of networking,” Lowe said. “But in the last 15 or 20 years, I have come to appreciate it on so many levels … especially now, when you need a friend.”

Other senior housing and care nonprofits may not be so lucky. Lowe, who is on the board of directors for LeadingAge’s Illinois chapter, said he knows of several other organizations the size of CMSS or smaller that are in jeopardy of going out of business as a result of the pandemic.

“For some, it’s an existential crisis,” Lowe told Senior Housing News. “I would say that there are going to be some closures of both good and bad facilities as this unfolds.”

Another company that has received a much-needed PPP loan is Elite Care, a senior living provider with two small-home residential care campuses near Portland, Oregon. Like CMSS, Elite Care obtained a PPP loan to cover eight weeks of payroll, though co-founders Bill Reed and Lydia Lundberg declined to share exactly how much.

“I think the loan will help us weather the storm because it will help us build up some liquidity,” Reed told SHN. “I’m more concerned about a year down the road.”

Elite Care’s founders feel the company has been fortunate in that it has not yet had a resident come down with Covid-19, and that its management company, Voorhies & Associates, has done a good job maintaining census despite the pandemic.

“Our bottom line has not been that affected at this time,” Lundberg told SHN.

Still, Reed is worried that Covid-19 could wreak havoc among the older adults who might move into the community later, and hurt the reputation of the senior living industry as a whole.

“I think we’re going to get a black eye as an industry because of a few bad actors,” Reed said. “And I’m hoping that that black eye doesn’t carry forward to a lack of demand in the future.”

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