California Primary Care Association and Capital Impact Partners Launch $25 Million COVID Response Loan Fund for Community Health Centers

October 07, 2020 (Sacramento, CA/Arlington, VA) – California’s community health centers (CHCs) are facing significant lost revenue as a result of business disruptions due to the COVID-19 pandemic. At the same time, CHCs are incurring unforeseen costs to implement technology for virtual health consultations. The impacts of the pandemic have been further exacerbated for many CHCs by the wildfires plaguing the state.

To bridge this cash flow gap, the California Primary Care Association (CPCA) and Capital Impact Partners have launched the $25 million CPCA COVID Response Loan Fund to provide flexible financing for CHCs. Fund investors include the Alliance Healthcare Foundation, The California Endowment, The California Wellness Foundation, JPMorgan Chase, Richard W. Goldman Family Foundation, and UnitedHealth Group.

It is a vital need, as CHCs not only serve one-in-six Californians, but also a predominant number of patients who fall below the federal poverty level.  California CHCs provide culturally competent care to the state’s most diverse communities, and serve one in every three Medi-Cal recipients. These residents are also largely impacted by both the health and financial effects of the pandemic.

Applications will be accepted through November 6th, 2020.

“Our more than 1,370 nonprofit members operate on razor-thin margins, often relying on federal program support based on patient visits. At the onset of the COVID-19 pandemic, patient visits severely dropped and are still not back to pre-COVID levels. This has a huge impact on their financial stability and their ability to keep their doors open to serve their communities. The CPCA COVID Response Loan Fund is a critical stopgap measure to prevent unnecessary closures of their operations,” said CPCA President & CEO Carmela Castellano-Garcia.

Since the beginning of the COVID-19 pandemic, CHCs have seen primary and preventive care visits drop by more than 50 percent, leading to temporary site closures, as well as staff layoffs and closures. CHCs are utilizing already strained budgets for testing and treating COVID-19 patients, purchasing personal protective equipment for staff, and implementing new technology solutions. In a recent poll of CPCA members, 70 percent indicated the need to explore how to create and deploy an emergency cash flow fund that they could access. 

“The global pandemic has magnified the lack of a safety net for our most vulnerable populations,” said Capital Impact Partners’ President and CEO Ellis Carr. “Community health centers are often the only places where uninsured and underinsured patients can access health care. If they must close or reduce services as a result of this crisis, untold millions will be severely impacted. We simply cannot let that happen.”

Key features of the CPCA COVID Response Loan Fund managed by Capital Impact Partners:

• Loans from $250,000 up to $1.5 million
• 3% interest rate
• No payments during the first year, then fully amortizing over 6 years
• Loan will be secured by a general all asset lien. No real estate collateral required
• Each borrower will automatically receive a grant for technical assistance and COVID-related expenses
• No fees associated with loan closing
• Prohibited Uses:
  • New facility development
  • Facility renovations unrelated to patient service in response to COVID-19
  • Refinancing existing debt

Eligible uses include any working capital need resulting from the COVID-19 pandemic. Uses include, but are not limited to:

• Operating revenue shortfalls
• Telemedicine infrastructure
• Capital and operating costs related to COVID-19
• Minor renovations to support better COVID-19 related care

Eligible Organizations:

• Non-profit health centers – including non-CPCA members – licensed in the state of California under Section 1204 of the California Health and Safety Code are eligible and encouraged to apply. These organizations include but are not limited to, FQHCs, FQHC-Look-Alikes, rural health clinics, Indian Health Clinics, free clinics, etc.
• Non-profit consortiums with a majority membership comprised of the non-profit health centers described above
• Health centers located on land recognized by the United States government as tribal land in California and operated by an Indian tribe recognized by the United States government

Applying organizations must also have been in operation for a minimum of three years and demonstrate negative operational impact resulting from the COVID-19 pandemic.

Timeline

Loan decisions will be made in late November with loan funding planned for mid-December.

CPCA and Capital Impact: Long-time advocates for CHCs

This is not the first time that Capital Impact and CPCA have partnered to meet the needs of CHCs during a time of uncertainty. During California’s 2008 budget crisis, which resulted in delayed Medi-Cal payments, Capital Impact and CPCA stepped in with a similar fund to help these facilities meet cash flow needs. In total, that fund supported 52 clinics with $40 million in financing.

In addition, Capital Impact and CPCA have managed the CPCA Ventures Loan Fund since 1998.  This low-cost financing resource was put in place to support health centers in need of construction, equipment and working capital financing.