Updated as of Monday, April 12, 2020 at 12:00 pm ET.
On March 27, 2020, the United States Congress approved and the President signed into law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), aimed at providing financial relief to consumers and businesses in response to the economic distress caused by the coronavirus (COVID-19) pandemic.
A cornerstone provision of this act is the Paycheck Protection Program (PPP), intended to help businesses cover their near term operating expenses during this crisis and to provide an incentive for employers to retain their employees.
What is the Paycheck Protection Program (PPP)?
As part of the CARES Act that was signed by President Trump on Friday, March 27, 2020, the Paycheck Protection Program (or PPP) provides funding for small businesses through federally backed loans and is administered by the SBA. This program will be open until June 30, 2020, or until program funds made available for this purpose are exhausted. Loans guaranteed under the Paycheck Protection Program (PPP) will be 100 percent guaranteed by SBA.
The CARES Act authorizes the SBA to temporarily guarantee loans under this new 7(a) loan program that will provide $349 billion in funding for eligible businesses to use towards:
• Employee salaries and wages, inclusive of related payroll costs
• Interest payments on mortgages entered into before February 15, 2020
• Rent obligations for a lease entered into before February 15, 2020
• Payment of utilities for which service began before February 15, 2020
• Interest on other debt obligations incurred before February 15, 2020
• Refinancing an SBA EIDL loan, used for payroll costs, made between January 31, 2020 and April 3, 2020 (If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan.)
I am a business owner. Am I eligible?
You are eligible for a PPP loan if you were operational on February 15, 2020 and have 500 or fewer employees whose principal place of residence is in the United States, or are a business that operates in a certain industry and meet the applicable SBA employee-based size standards for that industry. This includes tax-exempt nonprofit organizations, veteran’s organizations and Tribal business concerns.
You are also eligible if you are an individual who operates under a sole proprietorship or as an independent contractor or eligible self-employed individual and were operational on February 15, 2020.
Do I have to be an existing 555 Capital client?
No, at this time 555 Capital is accepting all PPP loan applications and assisting clients through the complexities of this grant. Please keep in mind that the program’s funding limitations may impact loan availability for those businesses applying later in the availability time frame.
How much can I borrow?
Based on funding availability, the maximum loan amount is the lesser of $10 million or an amount that you will calculate using the below payroll-based formula*.
Step 1: Calculate the aggregate payroll costs from the last twelve months for employees whose principal place of residence is the United States. Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000. Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12). Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5. Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).
*For seasonal firms, the lesser of $10 million or 2.5 times the average monthly payroll for the 12-week period starting either February 15th, 2019 or March 1st, 2019 (at the election of the borrower). For businesses without a full year of payroll history, the lesser of &10 million or 2.5 times the average monthly payroll from January 1st, 2020 to February 29th, 2020.
Can my loan payments under the program be deferred?
Payments on the loan are eligible for deferral for 6 months (including payment of principal, interest, and fees). Interest will continue to accrue on PPP loans during this six-month deferment.
Can my loan under this program be forgiven?
Yes. The amount of loan forgiveness can be up to the full principal amount of the loan and any accrued interest. That is, the borrower will not be responsible for any loan payment if the borrower uses all of the loan proceeds for forgivable purposes (over the eight-week period following the date of the loan) and employee and compensation levels are maintained. At least 75 percent of the loan forgiveness amount must be attributable to payroll costs.
How may I use the proceeds of the loan?
The proceeds of a PPP loan are to be used for:
• Payroll costs (At least 75% of the loan forgiveness amount must be attributable to payroll costs)
• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
• Payments of interest on mortgage obligations incurred before February 15, 2020 (but not mortgage prepayments or principal payments)
• Rent payments on leases dated before February 15, 2020
• Utility payments under service agreements dated before February 15, 2020
• Interest payments on any other debt obligations that were incurred before February 15, 2020
• Refinancing an SBA EIDL loan, used for payroll costs, made between January 31, 2020 and April 3, 2020 (If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.)
Do I have to pay a loan agent or facilitator to help me? Is there any fee to apply for SBA loans or grants?
555 Capital is acting as a facilitator to connect American small businesses to SBA-authorized lenders to get emergency loans for COVID-19 relief. Apply for free here, or call us at 866-757 3339 for a free consultation.
Unless your approved agent is one of your employees who is already on your payroll, you will NOT have to pay your agent—nor should any SBA/PPP loan facilitator or agent request any sort of compensation or fee from you.
Let us reiterate: there should be no fees paid by a business owner to file or access an PPP or other SBA loan. No closing costs. No origination costs. No application costs. No processing costs. Neither lenders nor agents are permitted to charge borrowers.
By law, applying for these SBA funds is free to the applicant. So what’s in it for the loan agents or facilitators? They receive their compensation from the approved lenders, who pay a small fee to the agents that bring applicants to them. Any origination fees are paid by the government.
As a seasoned boutique commercial financing company, we have seasoned veterans with extensive SBA and lending experience to help process your loans accurately and within the framework set forth under the CARES Act stimulus package.
We understand the critical role we play in the success of your business and are partnered with several SBA approved lenders and FDIC Insured Banks. We are here to support you and your business during this time. We appreciate your understanding and know we can get through this together.
Be sure to check this site regularly as we work to provide you with provision updates as they become available.
This is not a commitment to lend. All loans are subject to program requirements and availability of funds under the SBA PPP Program. Your application to participate in the Paycheck Protection Program is subject to SBA approval.