By Andy VanZee and The Knapp Group Team

As of the writing of this newsletter, we have received numerous reports from senior housing operators that, despite Covid-19 related lockdowns, occupancy has predominately remained steady over the past 30 days.  Here at the Knapp Group, we all pray that these trends continue, and seniors and staff can stay safe under the current lockdowns.

Unfortunately, Covid-19 cases are also beginning to show up inside the walls of senior housing facilities.  Though no one knows how such outbreaks will impact operations, the recently enacted Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), may provide economic relief if operations are negatively affected. 


The FFCRA was signed into law by the President on March 18, 2020 and requires private employers with fewer than 500 employees to provide special paid emergency family and medical (“FMLA”) leave and paid sick leave related to Covid-19 beginning on April 1, 2020.  Under FFCRA, private employers are eligible to receive dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under FFCRA.[1] 


The CARES Act was signed into law by the President on March 27, 2020 and goes further than the FFCRA by providing economic relief to small businesses and nonprofits with fewer than 500 employees through increased funding for the Small Business Administration (“SBA”) loan guarantees and subsidies under the previously established 7(a) loan program and emergency economic injury disaster loans (“EIDLs”)[2]. Additionally, the CARES Act establishes a third loan program call the Paycheck Protection Program (PPP)[3]. Eligible uses of the SBA’s 7(a) and EIDL loans include payroll support, employee salaries, group healthcare premiums, mortgage and rent payments, utilities, insurance premiums and any other debt obligations.[4] 

Under the CARES Act, applicants for EIDLs may request and emergency advance of up to $10,000 (which does not have to be repaid, even if the loan application is later denied).[5]  To receive the advance, the loan administrator is merely required to verify the applicant’s eligibility by accepting a “self-certification.”  Advances are to be awarded within 3 days of an application and can be used for any purpose already authorized under the SBA Disaster Loan Program, including[6]:

  • Providing sick leave to employees unable to work due to direct effect of COVID-19;
  • Maintaining payroll during business disruptions during slow-downs;
  • Meeting increased supply chain costs;
  • Making rent or mortgage payments; and
  • Repaying debts that cannot be paid due to lost revenue.

PPP loans are meant for businesses that typically would not qualify for a loan at local or national bank and can be used to cover payroll, utilities, insurance premiums, and rent and mortgage interest payments on a facility.[7] No collateral, credit test or personal guarantees are required for a PPP loan but the business must be open and operational on February 15, 2020.[8] 

Loan Deferral and Forgiveness

The CARES Act created a loan forgiveness policy for all loans granted by the SBA as part of the Covid-19 response. Recipients of all SBA 7(a) loans are presumed to qualify for complete payment deferral relief (principal, interest and fees) for 6 months to one year.[9] 

Recipients of SBA 7(a) loans may also be eligible for loan forgiveness in an amount that does not exceed the principal of the loan but equal to the what the borrower spends in the eight weeks after the loan is originated, including[10]:

  • Payroll costs;
  • Interest on mortgage obligations;
  • Rent on leasing agreements; and
  • Utilities (electricity, gas, water, transportation, telephone, or internet). 

To receive dollar-for-dollar loan forgiveness, employees must remain employed through the end of June and the employer must submit supporting documentation to their lender, including proof of verification of employees.[11]  Loan forgiveness will not be included in the borrower’s taxable income.[12] 

Additional Information

For more information about any of the loan types described above and how to apply, please visit the SBA’s website, the IRS Coronavirus Tax Relief page and U.S. Chamber of Commerce.   

[1] Hylant:

[2] The National Law Review:

[3] Id.

[4] The CARES Act, § 1102.

[5] Steptoe & Johnson, LLP:

[6] Id.

[7] The National Law Review:

[8] U.S. Chamber of Commerce:

[9] The CARES Act, § 1102.

[10] U.S. Chamber of Commerce:

[11] The CARES Act, § 1102(d).

[12] The CARES Act, § 1102(i).