WHMC gets SBA loan

COLFAX – Whitman Hospital and Medical Center was approved for a $3,303,562 Small Business Administration loan through the Paycheck Protection Program.

In a special meeting with the Commissioners of Whitman County Public Hospital District No. 3, Abby Smith, WHMC chief finance officer, presented to the hospital's board of commissioners the terms and potential risks behind the loan.

Resolution 20-02 was presented to the hospital commissioners on whether WHMC should move forward with the loan or not. The motion was approved allowing the hospital senior leadership to move forward with the loan and discuss what needs need to be met to implement the loan.

Within the Paycheck Protection Program those eligible, in the beginning, are small businesses with 500 employees or less, as well as any for-profit business entity, 501(c)3 non-profit, etc., excluding governmental entities. The program later expanded to include governmental rural hospitals who received less than half their funding from state or government sources, excluding Medicaid.

Smith said WHMC has a dual status of both a 501(c)3 organization as well as a governmental rural hospital.

"We applied for the loan under our non-profit 501(c)3 title," she said.

The loan is under a two-year term with an interest rate of one percent.

"With that small of an interest rate this is the cheapest money you can get," said Vice President of the Whitman County Public Hospital District No. 3 Commissioners Bob Vuletich.

If the funds from this loan are used for payroll costs, interest on mortgages, rent and utilities, the loan will be fully forgiven.

According to SBA.gov, the Small Business Association will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

"For this loan 75 percent must be used for payroll," Smith said. "Our eight weeks of payroll and utilities will be very close to the entire loan amount." She added that with or without this loan, payroll and utilities will need to be paid regardless.

With the eight weeks of payroll and utilities coming close to the loan amount, Smith said in her opinion, she believes they will have most of this loan forgiven.

Forgiveness on the loan may be reduced if the full-time employee headcount declines or if salaries and wages decrease.

During this time of the COVID-19 crisis, there was a group of WHMC employees who did receive a 10 percent reduction in pay. Smith said she isn't sure yet what their pay will look like, whether it's full pay or reduction pay, with this loan.

"We have been approved for the loan, but at this moment we aren't sure what all needs to be done to fulfill the requirements," Smith said.

Possible risk in regards to this loan is changes could occur to the interpretation of rules or federal government audits leading to potential payback from the hospital. Another financial risk Smith noted in her presentation was WHMC may incur added expenses that they wouldn't otherwise incur to fulfill following the Paycheck Protection Program loan requirements.

She said the bank, which WHMC works with, has notated that it feels the risk for this loan is minimal.

"The whole point of this program is to keep your people employed and working," Smith said.