The Coronavirus Aid, Relief and Economic Security Act (CARES Act), signed into law on March 27 by President Donald Trump, offers loans to ease the detrimental financial impact of COVID-19 on radiologists, radiation oncologists, medical physicists and their professional practices.
Emergency Relief and Taxpayer Protections (Sections 4003 and 4004 of the CARES Act) provide $500 billion to the Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees and other investments. Criteria for all direct lending includes many provisions, among them:
- Alternative financing is not reasonably available to the business,
- The loan is sufficiently secured,
- The duration of the loan shall not exceed five years,
- Borrowers and their affiliates cannot engage in stock buybacks, unless contractually obligated, or pay dividends until the loan is no longer outstanding or one year after the date of the loan, and
- Borrowers must, until Sept. 30, 2020, maintain their employment levels as of March 24, 2020, to the extent practicable, and retain no less than 90 percent of its employees as of that date.
- Additionally, Section 4004 stipulates a limitation on certain employee compensation, specifically:
- Prohibits increases in compensation for employees with total compensation of $425K,
- Prohibits offering such employees severance pay upon termination of employment, which exceeds twice the maximum total annual compensation received by that employee, and
- The compensation limitations are in place until one year after the loan is no longer outstanding.
- Employees making over $3 million in 2019 would also be prohibited from earning more than $3 million plus 50 percent of anything exceeding $3 million.
The aforementioned information is for educational purposes only. The American College of Radiology® will post guidance as it becomes available.