What is the SBA Paycheck Protection Program and how can you apply?

UPDATE: As of 4/13, The SBA has approved several large Fintech groups, such as Paypal, to offer SBA PPP loans directly. We believe that these groups will address the need far better than the incumbent banks. With their entrance, we believe the need for us to develop an app has ceased. TapCap will no longer be developing a PPP app and will continue to focus on multifamily. Thank you!


$349Bn
Funds to be distributed to
Small Businesses to help cover payroll.

As of April 3rd, the U.S. Small Business Administration (SBA) has made $349Bn available under the CARES act “Paycheck Protection Program” to help businesses keep employees on payroll.

Even further, if at least 75% of those loan proceeds are used directly for payroll, the SBA will forgive the loan entirely after 8 weeks. It effectively becomes a grant.

The issue so far has been that the banks are moving at a glacial pace. The loans carry just a 1% interest rate. And though they can be compared to the 2 month treasury (0.11% as of 4/3), they are trying to figure out how to turn this relief fund into a land grab. Many are only granting the relief if you are a preferred client of the bank, or if you are willing to switch over.

That is just not good enough. So TapCap is partnering with alternative SBA lenders who can deliver efficiently, with zero hidden fees and zero strings attached.

Who is the program for?

The program is intended for all U.S. based businesses with 500 employees or fewer.

While typical SBA loans exclude nonprofits, the paycheck protection program includes all nonprofit 501(c)(3), veterans organizations 501(c)(19), tribal business concerns 31(b)(2)(c).

Individual contractors and other self-employed individuals are eligible too.

The only companies not eligible are companies owned by individuals who are incarcerated, on probation, convicted of a felony in the last 5 years or who have previously been delinquent or defaulted on a loan from the SBA .

How much can my business qualify for?

The lesser of:

$10M
or
2.5 x average monthly payroll expense *

*The maximum monthly paycheck size allowed is $8,333 (eq. $100,000 annual)

Example

Acme Corp has 5 employees. As of February 15th, 2020, the payroll schedule for the company was:

Title Annual Pay Eligible Annual Pay Eligible Monthly Pay
CEO $150,000 $100,000 $8,333
VP $115,000 $100,000 $8,333
Analyst I $80,000 $80,000 $6,667
Analyst II $80,000 $80,000 $6,667
Admin $60,000 $60,000 $5,000
Total $485,000 $420,000 $35,000

Acme Corp would qualify for an $87,500 loan.


What are the terms of the loan?

   
1%
Interest
The loan carries a 1% annual interest rate. There are no payments for the first 6 months - interest accrues for the first 6 months and is paid equally through the duration of the loan.

All Interest and principle can be 100% forgiven by the SBA if at least 75% of loan proceeds are used for payroll
2
Years
The loan has a 2 year term - however the full principle and accrued interest can be forgiven by the SBA after 8 weeks.
75%
Payroll
At least 75% of the proceeds must be used to cover payroll, including salary, health insurance, wages, commissions, cash tips; parental, family, and medical leave.

The other 25% may be used for mortgage, rent and utility payments.
0%
Recourse
This loan is non-recourse. The full principle and interest can be forgiven as long as the above term is followed (75% payroll).

If the funds are used for unauthorized purposes, the SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, the SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

How Do I Apply?

UPDATE: As of 4/13, The SBA has approved several large Fintech groups, such as Paypal, to offer SBA PPP loans directly. We believe that these groups will address the need far better than the incumbent banks. With their entrance, we believe the need for us to develop an app has ceased. TapCap will no longer be developing a PPP app and will continue to focus on multifamily. Thank you!

TapCap is partnering with a select few SBA lenders who pledge to be honest and transparent through the process, and to lend with zero strings attached.

We are developing an app that will guide you step by step through the process. We expect the first version of the app to release by April 17th.

Please note that this is a moving target. Any TapCap service or statement is not a guarantee of loan approval. Eligibility and terms are ultimately decided by the SBA and the licensed SBA lender. This site does not constitute an offer to lend or provide a service by TapCap Co. or any other third party regardless of whether product or service is referenced herein. Furthermore, nothing here is intended to provide tax, legal, or financial advice and nothing in this website should be construed as a recommendation to engage in any transaction.

Oh, and if you would like to help, please send us an email at sba_help@tapcap.co.

Information Sources