CARES Act Payroll Protection Program

Attention Business Owners and Self-Employed Persons:
You may wish to apply for a forgivable loan under the Paycheck Protection Program. 
The Paycheck Protection Program (PPP) is a new loan designed to provide funding for payroll, group health benefits, rent, mortgage interest and utilities. The program may begin accepting applications on April 3rd. Some or all of the loan may be forgiven if proceeds are used for these costs and all employees are kept on payroll for eight weeks. The $349 billion program was created under the CARES Act just one week ago and as such some aspects of the loan are still in flux.

Where Can I Read About the Features and Benefits of the Program, Including Forgiveness?
A summary of the key features of the program is available from the U.S. Small Business Administration (SBA) at:

Who Should Consider Applying?
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. There are some industry-specific exceptions for businesses with over 500 employees and if your company is over 500 employees you should make an inquiry into these exceptions.

What Interest Rate Will the Loan Carry?
The SBA website as of April 3rd, 2020, has stated a rate of 1.0%. 

What is the Term of the Loan?
The CARES Act describes the loans of having a term of not more than 10 years. Presently, the SBA website states a maturity of 2 years.

Where Do I Apply?
Although the loans are backed by the federal government and it is an SBA loan, applications must be made through a bank. Not all banks will participate in the program. Even with the SBA proclaimed April 3rd launch date, some banks may not have determined if or when they will accept applications. The infrastructure and administration may take additional time to roll out to applicants. Existing search tools to identify SBA lenders may not be updated to reflect which banks are offering the PPP.

What Should I Do Now If My Company Could Benefit?
We strongly recommend that you contact existing bank relationships to determine if your lender will be part of the program. The SBA and Treasury have released a sample application online to help applicants understand what information is needed, but lenders may have different or supplemental forms.

What Else Do I Need to Know?
No personal guaranty nor collateral is required. Cancelled indebtedness under the loan is not taxable income. At present, the program appears to be first-come-first serve. If there is not enough funding for all of the businesses that apply, it is not known what additional relief may be made available. Terms are subject to change and you should carefully review any loan documents with a tax and legal advisor before completion. Be wary of scams offering easy or fast access to funds.


As of April 3rd, 2020, this provides general information about the CARES Act and represents the opinions of Heritage Financial Services. Prior to making any decisions on how the CARES Act may apply to your individual situation, you should seek advice from a tax or legal advisor that will take into account all of the information that may be available at that time and the particular facts and circumstances of your situation.