Press J to jump to the feed. SBAs EBL program guide is available here: https://www.sba.gov/document/support--express-bridge-loan-pilot-program-guide, CALIFORNIA SMALL BUSINESS COVID-19 RELIEF GRANT PROGRAM. For the loan to be fully forgivable, any PPP loan proceeds that are not spent on payroll costs must be spent on certain non-payroll costs: namely, mortgage interest payments, rent, operations expenditures, property damage costs, supplier costs, worker protection expenditures, and utilities. Your calculation would look like this: Please note, if your Schedule C business took a loss prior to the COVID-19 pandemic and you had no employees, you will not be considered to have a salary for this calculation. Standard SBA Loans are not available for passive income (except Hotels and Self Therefore, it will be more difficult for you to represent that the pandemic itself has had an adverse impact on your business. The borrower can spend the owner income replacement portion of the PPP loan on anything the borrower chooses. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. Below are some resources and links that you can use to find a PPP lender. Heres the simplified three-step process: Heres an example of the PPP loan calculation in action. A borrower will now be able to receive forgiveness if the borrower signs and submits to the lender, On June 17, 2020, the SBA posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act. No additional forgiveness is provided for retirement or health insurance contributions for self-employed individuals, since such expenses may be paid out of their net self-employment income. For annual revenue of $1,000 to $100,000, the available grant amount is $5000. The actual loan size borrowers receive will be determined by a formula based on average total monthly payroll costs over a one-year period. Any other COVID-19 related expenses not already covered through grants, forgivable loans or other relief through federal, state, county or city programs. Funds are usually available within 5 to 10 business days of approval. If a Schedule C filer elects to use gross income to calculate its loan amount on a First Draw PPP Loan, and the borrower reported more than $150,000 in gross income on the Schedule C that was used to calculate the borrowers loan amount, the borrower will not automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith, and the borrower may be subject to a review by SBA of its certification. Have used or will use the full amount of their initial PPP loan. You do not need to take any action related to this decision prior to filling out the loan forgiveness application. Technology f`~5U Theres Still Time to Apply with FEMA: Those who have uninsured or underinsured losses can apply with FEMA in one of three ways: online at One was a schedule of liabilities. The CARES Act II, signed on December 27, 2020, makes it clear that expenses paid with forgiven PPP loan proceeds can be deducted from the business federal income taxes, overturning a previous IRS rule on this subject. Option 1: Economic Injury Disaster Loans (EIDL) Businesses with 500 or fewer employees including sole proprietors, independent contractors and cooperatives Multifamily Minute Reader Reflections: How Will You Address Vacancy in 2023? As an Ebby Halliday client, youll benefit from knowledgeable, respected agents and a team of trusted professionals dedicated to making buying or selling your They want to know all of your debts. No. There are some exceptions, such as for a business with more than 500 employees that is considered small under SBA Size Standards. Do I have any other options? These lenders will be handling the PPP application process. 0 has not paid and will not pay the companies any compensation whatsoever for the level of service they have committed to providing. Additionally, per the SBAs Interim Final Rule, sole proprietors must have claimed or been able to claim these expenses as deductible on their 2019 or 2020 IRS Form 1040 Schedule C in order for them to be forgivable when paid with PPP loan proceeds. For businesses established after the third quarter of 2019, the SBA compares revenue from any 2020 quarter to the fourth quarter of 2019. Right now, there are over 2 million Americans with active real estate licenses, and over 1.3 million members of the National Association of Realtors (NAR). Using line 7 gross income will usually lead to a higher loan calculation, so it will be preferred for most sole proprietors. No. All Any EIDL Advance Amounts previously deducted from a borrowers forgiveness amount will be remitted to the lender, together with interest to the remittance date. If you operate as a sole proprietor, you can use the PPP loan proceeds as a substitute for the compensation you would normally receive from commissions. First, shop around! You should carefully review the options available to select the SBA loans that will be the best fit for your needs and circumstances. Checking vs. Savings Account: Which Should You Pick? The result is the amount of PPP loan funding that youre eligible for. For utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks or account statements verifying those eligible payments. The SBA has released the sample application forms for first and second draw PPP loans: First draw PPP loan borrower application form, First draw PPP loan application for Schedule C Filers Using Gross Income, Second draw PPP loan borrower application form, Second draw PPP loan application for Schedule C Filers Using Gross Income. For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. C.A.R. Yes, but the borrower may include only the share of covered non-payroll expenses that were deductible on the borrowers 2019 or 2020 tax filings. WebWe have been helping real estate agents and title companies with their foreign national clients for almost 20 years. Your lender may have additional instructions for submitting the PPP loan forgiveness certification. Only those who applied for EIDL assistance on or before December 27, 2020 are eligible to receive a targeted EIDL advance. Real estate agents can use a Small Business Administration (SBA) 7 (a) loan to purchase real estate, buy or construct buildings, modernize their facilities, Will I need to pay income tax on the PPP loan proceeds if I use the proceeds for income replacement? However, lenders and borrowers can mutually agree to modify the maturity terms of a PPP loan. Thank You so much. Click here for our Advertiser Disclosure. With all of the information floating around about stimulus packages and loans, you're probably wondering what this bail out means to you, as a real estate agent, and how you can get access to YOUR stimulus money We want to make sure you know exactly how to get the support you need and how to get it the right way, so we asked the experts to explain it to us, and boy did they deliver. 1. We have investments real estate, clothing, watches and other goods. Get referrals from family or friends who have used an agent or look for one who is active in the neighbourhood in which you are selling or buying. Go to your Schedule C (Form 1040) and find your net profit on line 31. If the first disbursement is not made within 90 days from receipt of an SBA loan number, the EBL loan will be canceled. As real estate agents, we are exactly who these legislations were designed to help. This second loan is called a second draw PPP loan.. You will choose the length of the Covered Period for your loan when you fill out the PPP loan forgiveness certification or application. Borrowers with loans of $150,000 or greater will need to submit additional documentation to obtain forgiveness. Must be an active business operating since at least June 1, 2019. Once approved, money is usually transferred to your bank account, using the banking information that you provided in the application. These loans are offered in amounts of up to $350,000. Where can I find a step-by-step guide for completing the application? The Covered Period cannot extend beyond September 30, 2021. For rent or lease payments: Copy of current lease agreement and receipts of cancelled checks verifying eligible payments from the Covered Period. When can I submit my loan forgiveness certification or application? SBA 7(a) loans for working capital and equipment have terms of up to 10 years, while SBA 7(a) loans for commercial real estate loans have terms of up to 25 years. Things are still changing on a daily basis and more and more clarity is being provided, but as of now For the Payroll Protection Plan (PPP): The sum of payments of any compensation to or income of a sole proprietor/independent contractor that is a wage, commission income, net earnings from self-employment or similar compensation, not more that $100,000 annually as pro-rated during the covered period,(February 15, 2020-June 30,2020). However, it is possible the state law will be changed to conform with the new federal law. In 2017, over 6 million homes were sold across the United States, and nearly 90% of sellers used a real estate agent to help them through the process. How will PPP loan forgiveness for owner replacement income work if I am a sole proprietor? You can verify eligibility on the first page of the EIDL application. This allows them to overcome one of the largest hurdles their clients face the financing portion of bringing their dream business to life. Weve all come to expect an overly complicated process when it comes to anything associated with government programs. Use r/TargetedEIDL for advance/grant issues. And, if youre a real estate agent or realtor looking to get an edge over the competition, getting an SBA loan could be great way to do so. Nothing on this website is an offer or a solicitation for a loan. For sole proprietors without employees, proprietor expenses or owner income replacement can encompass the entire principal of the loan, so no additional supporting documentation will need to be submitted to obtain forgiveness. Who Are Specialized Lenders in the SBA 7(a) Loan Program? UTC-05:00. Thank you SIC code 6531 isnt even right for my biz but thats what NAV shows so I guess thats what they will use. Tax forms (or equivalent third-party payroll service provider reports for the periods that overlap with the Covered Period. Pursuant to the COVID relief package that passed on December 27, 2020 (known as CARES II Act), borrowers that have previously received a PPP loan will now be allowed to take out a second PPP loan. Employees will likely need to pay income tax on the loan proceeds they receive, although the IRS has not yet issued any formal guidance on this. Construction and real estate Best Mortgage Lenders for First-Time Homebuyers. Borrowers have until December 31, 2020 (or, for PPP loans made after December 27, 2020, the last day of the Covered Period) to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. Yes but borrowers cannot take out an EIDL and a PPP loan for the same purposes. Please refer to the Targeted EIDL Advances section below for more information. However, there are some PPP lenders, such as community banks, that are willing to take new customers. However, if your loan was greater than $50,000, the PPP Loan Forgiveness Application incorporates several formulas to reduce a borrowers loan forgiveness if the borrower laid off employees after receiving the PPP loan and/or if the borrower reduced employee salaries by more than 25% after receiving the PPP loan. For second draw PPP loans of not more than $150,000, borrowers must submit documentation sufficient to establish that they experienced a reduction in revenue. Borrowers with employees may have costs that fall into this category. Thus, most real estate industry borrowers should be able to truthfully certify that they were unable to operate at the same level of business activity during the Covered Period as they were able to prior to February 15, 2020. The 2019 or 2020 IRS Form 1040 Schedule C that was provided by a sole proprietor at the time of the PPP loan application must be used to determine the amount of gross income or net profit allocated to the borrower for the Covered Period. Eligible rent costs include payments for rent obligations on real or personal property under a leasing agreement in force before February 15, 2020. Its also important to understand that if you do pledge collateral, youre placing a lot of temporary restrictions on your business including the stipulation that while your loan is still outstanding, you cannot sell, lease, or transfer any collateral that was used as a loan guarantee without the approval of the SBA. Webhttps://crumrealestate.comHere is information to help Independent Contractors get through the Coronavirus epidemic. If the eligible entity received an EIDL advance earlier under the CARES Act, the targeted advance allows the entity to receive an amount equal to the difference of what the entity received under the CARES Act and $10,000. Substantial economic injury means the business is unable to meet its obligations and pay its ordinary and necessary operating expenses. For supplier costs: Copy of contracts, orders, or purchase orders in effect at any time before the Covered Period (except for perishable goods), copy o invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments. Payroll costs also do not include: Compensation of an individual employee in excess of an annual salary of $100,000; employer-side payroll taxes, railroad retirement taxes, and income taxes; any compensation of an employee whose principal place of residence is outside of the US; and qualified sick or family leave wages for which a credit is allowed under the Families First Coronavirus Response Act. The only portion of the loan that was able to be forgiven was the advance, which is no longer available. All EIDL loans carry a term of 30 years, with an interest rate of 3.75%. Additionally, realtors can use the loan to help small businesses find the funding they need to purchase commercial real estate in the first place. Where can I find more information about EIDLs? Image source: Author. Hope this helps! However, keep in mind that CPAs are allowed to charge fees for advisory services, such as helping you decide which COVID-19 relief program is the best fit for your needs and circumstances. Before taking out a loan, be sure to speak with a qualified commercial real estate broker to discuss all of the risks and benefits associated with this type of financing. If this amount is over $100,000, reduce it to $100,000, if this amount is less than zero, set this amount at zero. For the formula to calculate the maximum PPP loan you are eligible for, see the Application Process section below. C.A.R. Low-income community is defined in the Internal Revenue Code as any population census tract where the poverty rate is at least 20 percent, or (i) in the case of a tract not located within a metropolitan area, the median family income for such tract does not exceed 80 percent of statewide median family income; or (ii) in the case of a tract located within a metropolitan area, the median family income for such tract does not exceed 80 percent of the greater of statewide median family income or the metropolitan area median family income. On March 30, President Biden signed the PPP Extension Act. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that you included in the loan forgiveness amount. Remaining portions of the EIDL, for purposes other than those laid out as eligible for loan forgiveness under the PPP, will remain a non-forgivable loan. (Note: Sick leave tax credits under the Families First Coronavirus Response Act (FFCRA) are not included as payroll costs that can be paid with a PPP loan. Loans are for a term of 30 years. Any new loan applications and any loans in process when the new loan limits are implemented will automatically be considered for the 24 months of economic injury up to a maximum of $500,000. The EIDL has a 30-year repayment plan, and there is no prepayment penalty if you decide to pay early. In order to qualify for an SBA 504 loan, businesses must meet a strict set of eligibility requirements: In addition, the prospective borrower applicants must: Real estate agents can take advantage of the Small Business Administration's (SBA) loan programs to help fund their business.