Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)

The House of Representatives approved a historic $2 trillion stimulus package and the President then signed it into law.  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on 3/27/2020, creating:

    • SBA Payment Protection Program (PPP)
    • SBA Emergency Disaster Loans
    • Employee Retention Tax Credit
    • Expanded Charitable Deductions

Providers need to review programs being offered, decide what works best for their agency and execute the necessary application(s) in a very timely order.  Use this link for a detailed account of the CARES Act –

CARES Act Briefing NonProfit

We took a deeper dive into the Paycheck Protection Program, a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.  Loans are made by lenders certified by the Small Business Administration (SBA) and guaranteed by the federal government. The SBA will administer the PPP.  Use this link to view the PPP Borrower Information Fact Sheet –

PPP Borrower Information Fact Sheet

Loan eligibility is for small businesses with less than 500 employees.  Monies can be used for payroll, rent, mortgage interest, and/or utilities.  It is important to note that there is a debt forgiveness element to this loan.  Businesses that use the funds to retain their workers during the first eight weeks of the loan can have 100% of the loan forgiven.  Reducing employees reduces the loan forgiveness.  The loan itself accrues a 1% rate of interest with a two-year term and the first payment is deferred for six months.

Lenders began processing loan applications on April 3, 2020. Independent contractors and the self-employed can start applying on April 10.  The Paycheck Protection Program will be available through June 30, 2020.  But it is best to act quickly as there is a funding cap.  Approximately $350B has been allocated to small businesses for the PPP.  Bank of America alone dispensed $29B on Friday, April 3, 2020 so it is unlikely these funds will last through the end of this week.  However, Congress is already talking about appropriating additional funds for this purpose.  If you wish to submitted an application, you should do so as soon as possible.

You will want to consult with the primary bank that you do business with.  Banks appear to be giving priority to customers as opposed to applicants that have no business with them.  To find eligible lenders as per SBA, use this search link – https://www.sba.gov/paycheckprotection/find.

Use this link for the PPP Loan Application –

PPP Lender Application Form

For a comprehensive look into the PPP, click here –https://www.sba.gov/funding-programs/loans/coronavirus-relief-options

Our Experience

My company applied for the Paycheck Protection Program (PPP) through our primary bank.  While the process is simple enough, the speed at which the program has been implemented are leaving both parties (businesses and the banks) with several questions and uncertainties.   Arlington Heritage Group works with three different banks to conduct its business and we applied with two of them.  It is an open-ended question whether this was proper.

We note that the question on page 2 of the PPP paper application has the following attestation:

“During the period beginning February 15, 2020 and ending December 31, 2020, the applicant has not and will not receive another loan from the Paycheck Protection Program.”

This was a truthful “no.”  However, on the electronic intake from the bank, there appeared the question:

“Have you applied for another Paycheck Protection Plan loan here or elsewhere?”

If the answer is “yes”, then the application will proceed no further.  It is unclear whether banks are rejecting applications from those businesses that apply to multiple banks for the PPP.  If this PPP is vital to your operations, then apply with as many banks that you can and hope that you get an approval by one of them.

The automated intake that we filled out takes similar information that would be needed for a traditional bank loan or a line of credit.  This includes business name, address, phone number, EIN, names (SSNS) of business owners, average monthly payroll and number of employees.  The intake wanted to know the nature of the business in broad categories.  Interestingly, it did not ask for owner salaries or net worth which is de rigeur when applying for a loan or line of credit.

We were asked to upload the following documents:

–owner(s) driver’s license

–IRS form 941

–IRS form 944

–IRS form 940

If you are an independent contractor, you will need to upload 1099s.  The good news is that all of the above documents (save for the driver’s license) can usually be generated by your payroll company through their electronic platforms.  That is the quickest way to obtain those forms.  The uploading was the last piece of the application required to do this online.  I did not receive any other message after finishing other than to say the bank had received my application and would be hearing from them in 3-5 days.

This particular bank’s intake did not allow the uploading of files other than jpeg and pdf.  It did not accept Word or Excel files.  Other than the uploading of the documents, I had no issues with the online application.