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In our next piece, we also cover two big tax options real estate brokers can use to provide further relief. From March 5 to March 11, grants will be awarded to waitlisted businesses that applied during the previous application rounds, but new applications will not be accepted during this round. Image source: Author. There are some exceptions, such as for a business with more than 500 employees that is considered small under SBA Size Standards. What expenses can I spend the PPP loan proceeds on if I want the loan to be forgiven? A source for information on applying for LOANS from the SBA's Covid-19 EIDL, reconsideration issues for declined loan applicants, and EIDL increase requests. 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. The only portion of the loan that was able to be forgiven was the advance, which is no longer available. Read more: PPP eligibility and how small businesses can use the funds. EIDL loans carry a low interest rate and a 30-year repayment term and can offer a lifeline to struggling small businesses. Image source: Author. Refer to www.sba.gov for full program details and coverage. 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). Please see the following statements C.A.R. Since real estate agency is a personal service business (which makes cost of goods sold inapplicable for most brokers), brokers should typically be able to use gross income or total income (for a firm) to determine their gross receipts for a quarter. If SBA determines in the course of its review that the borrower was ineligible for the PPP loan based on the provisions of the CARES Act, CARES Act II, SBA rules or guidance available at the time of the borrowers loan application, the loan will not be eligible for loan forgiveness. The funds can be used for land, improvements, construction, retrofitting, and more. In 2020, the CARES Act II reopened the PPP program for those who hadnt taken a PPP loan in the first round, as well as providing for the second draw PPP loans discussed below. If I'm on Disability, Can I Still Get a Loan? Source. To verify payroll costs, you must submit the following documents along with your PPP Loan Forgiveness Application: 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. Lenders are required to issue decisions on borrowers' forgiveness applications to the SBA within 60 days after receiving them. Generally, receipts are considered total income (or in the case of a sole proprietorship, independent contractor, or self-employed individual gross income) plus cost of goods sold, and excludes net capital gains or losses as these terms are defined and reported on IRS tax return forms. How will PPP loan forgiveness for owner replacement income work if I am a sole proprietor? Great to put this video instruction and helping out. However, keep in mind that EIDLs (with the exception of targeted advances) are conventional loans and not forgivable. How long will it take for me to get a PPP loan after I apply? %%EOF Fill out the form below and a member of our team will get in touch with you. Get Quotes. Real estate agents can use a Small Business Administration (SBA) 7(a) loan to purchase real estate, buy or construct buildings, modernize their facilities, improve energy efficiency, and more. 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. The lender is responsible for notifying the borrower of the forgiveness amount after the SBA makes its decision. If the eligible entity has previously applied for EIDL assistance on or before December 27, 2020 but has not yet received an EIDL advance, the entity will be eligible to receive a grant of $10,000. If the borrower applies for forgiveness before the end of the Covered Period and has reduced any employees salaries or wages in excess of 25%, the borrower must account for the excess salary reduction for the full Covered Period. company. All Rights Reserved. No. See Question 3A. Checking vs. Savings Account: Which Should You Pick? WebWe have been helping real estate agents and title companies with their foreign national clients for almost 20 years. The real estate industry was adversely affected by statewide and local orders that were put in place in response to the COVID-19 pandemic. If I previously applied for a PPP loan and calculated my loan amount based on net profit, can I now reapply based on a gross income calculation? buHX M@B `l&FZ#R ?a Thus, if you are a Schedule C filer whose gross income is greater than $150,000 and you apply for a PPP loan, the SBA may send you a Loan Necessity Questionnaire to verify that current economic uncertainty made the loan request necessary to support the ongoing operation of your business. The expanded Covered Period permitted by the PPP Flexibility Act increases the amount eligible for forgiveness to business owners for cash compensation paid to employees. Yes, in some cases. You tax returns schedule C they will correlate with your profit and loss! If this amount is zero or less, you are not eligible for a PPP loan. You could, if desired, get a PPP loan to cover payroll costs (defined below) and other costs that are forgivable under the PPP, and then get an EIDL loan to cover some of your other expenses. Click here to read our full review for free and apply in just 2 minutes. Formula for firms to determine eligible loan amount: Step 1: Compute 2019 or 2020 payroll by adding the following: 2019 or 2020 gross wages and tips paid to your employees whose principal place of residence is in the United States computed using 2019 or 2020 IRS Form 941 Taxable Medicare wages & tips (line 5c- column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips; subtract any amounts paid to any individual employee in excess of $100,000 annualized and any amounts paid to any employee whose principal place of residence is outside the United States; and. However, if you get the $10,000 advance from the EIDL, you cannot use it for payroll costs and must instead use it for other business expense obligations. Payment deferment means that you are not required to immediately begin making payments to the lender. Because an EBL loan is a bridge loan, first disbursement of the EBL loan must occur within 45 days of the lenders receipt of an SBA loan number. For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. (NOTE: This paragraph does not apply if your loan was under $150,000 and are eligible to fill out the short-form certification.). You cannot request the specific amount of the loan - instead, the SBA determines how much you can borrow using a formula intended to approximate 24 months of your operating expenses. Will this affect my PPP application? There remain many ambiguous provisions in the laws that continue to be clarified by rule-making at the federal and state agencies. Thank you SIC code 6531 isnt even right for my biz but thats what NAV shows so I guess thats what they will use. Must not use proceeds for any of the following: Funding for other debts (refinancing, consolidating, or repaying). The actual loan size borrowers receive will be determined by a formula based on average total monthly payroll costs over a one-year period. We are not affiliated with the Small Business Administration (SBA). ($100,000 12 * 2.5). WebSBA Economic Injury Disaster Loans (EIDL) are eligible for Rental Property Owners. What is an initial Paycheck Protection Program loan, and who qualifies? The contractor must have been engaging in business when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements. 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. One was a schedule of liabilities. How do I calculate my maximum PPP loan amount if I am a sole proprietor with employees? All users should perform their own due diligence and research. Legislation and regulation For worker protection expenditures: Copy of invoices, orders, or purchase orders paid during the Covered Period and receipts, cancelled checks, or account statements verifying those eligible payments, and documentation that the expenditures were used by the borrower to comply with applicable COVID-19 guidance during the Covered Period. Please be advised that you are not required to seek services from any of the companies suggested. If you only have a personal checking account, these lenders will still not accept your PPP application. Step 3: Multiply the average monthly amount from Step 2 by 2.5. If you are considering applying for a PPP loan with one of these smaller lenders, here are some resources to locate a lender in your area. Read more: SBA PPP loan economic uncertainty certification. Multifamily Minute Reader Reflections: How Will You Address Vacancy in 2023? (Note: The cap is based on 8 weeks worth or $15,385, whichever is less, for an 8-week Covered Period.). Copyright, Trademark and Patent Information, An individual who operates as a sole proprietorship or as an independent contractor, A private nonprofit organization that is a nongovernmental agency or entity, Any illegal activity as defined by the federal government, Any activities of a prurient sexual nature, Earning more than one-third of its gross income from legal gambling activities. This loan program can be used to build your real estate office, purchase commercial real estate, modernize facilities, improve energy efficiency, and more. Therefore, it will be more difficult for you to represent that the pandemic itself has had an adverse impact on your business. 2054 0 obj <>/Filter/FlateDecode/ID[<8C8FAFB2856FD243BB76F15BC6E77F5A>]/Index[2030 41]/Info 2029 0 R/Length 108/Prev 228727/Root 2031 0 R/Size 2071/Type/XRef/W[1 2 1]>>stream Check with your lender for specific details on how they will accept applications. Additionally, no collateral is required to obtain a loan, and there is no personal guarantee requirement. The deadline applies for both first and second draw PPP loans. 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. The commission is negotiable and is typically split between the sellers agent and buyers agent at 3% each. All Can I receive a targeted EIDL advance if I have not yet applied for an EIDL? Its time for you to get more listings, more leads, and sell more homes in the next 12 months than you did in the last 12 months. The EIDL loan proceeds may be used for working capital purposes, including payments of fixed debts, payroll, and accounts payable. This means that a borrower that chooses to file before the end of the Covered Period cannot contact the lender at a later date to mitigate any salary reductions after the loan forgiveness application has been filed. 0 An EIDL can help small business owners weather the COVID-19 storm. For annual revenue of $1,000 to $100,000, the available grant amount is $5000. The SBA requires that at least 75% of the PPP loan be spent on payroll, while the remaining 25% can be spent on expenses such as utilities, rent, mortgage interest and other debt obligations. What should I look out for? 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. will provide updates when we receive more information. Will this affect my loan forgiveness? She previously worked as an accountant. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. (Like an emergency grant that is available within 3 days of applying even if you haven't been approved yet!). The deadline for all borrowers to apply for an initial or second draw PPP loan is May 31, 2021. Tue Mar 07 2023 at 10:00 am to 12:00 pm. 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, Apply for a loan in minutes and get multiple quotes today Applicants who submitted their application and submitted all documentation in an earlier application round should not reapply during subsequent rounds, since one complete application qualifies an applicant to be considered for all rounds. C.A.R. hello@sba7a.loans, SBA Loan ComparisonSBA 7(a) Loan Fees, Rates, and TermsQualifying for an SBA 7(a) LoanSBA Loan Guides per State, Privacy PolicyTerms of UseAdvertiser Disclosure. Applications will be reviewed to determine whether the applicant meets the eligibility requirements. https://careliefgrant.com/wp-content/uploads/2020/12/FOR-WEBSITE-ONLY-CRG-All-Businesses-Program-and-Application-Guide-Public.pdf. In comparison, microloans are loans designed for smaller, startup businesses, and are offered in amounts of up to $50,000. Unlike the PPP loan, EIDL loan forgiveness is not an option. Loans are automatically placed into deferment the first year of the loan, with repayment starting a year from when the initial loan was received. Do I have any other options? 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. Chris and Gary, As mentioned earlier, there are a lot of things that you cannot spend EIDL funds on, including employee bonuses, relocation costs, or loan repayments. Also, you will want to determine if the lender has a specific timeline indicated in its written materials that promises to provide a response when you submit an application request. SBA Covid-19 EIDL Loan Collateral and Personal Requirements SBA Covid-19 EIDL Loan Collateral and Personal Guarantee Requirements Address: 1016 E Osceola Parkway, Kissimmee, 34744, Florida, United States Phone: 407-502-2400 E-mail: info@freedomtaxfl.com Freedom Immigration Freedom Insurance & Financial If the lender determines that the borrower is entitled to forgiveness of some or all of the loan amount, the lender must request payment from SBA at the time the lender issues its decision. When do I have to begin and end using PPP loan proceeds to qualify for forgiveness? HUD 221d4 Loan, We can help you determine which program would be the right fit for your business, as well as determine the appropriate loan amount. A California law passed on September 9 stated that expenses paid with forgiven PPP loan proceeds cannot be deducted for state income taxes. No; however, emergency grant portion does not need to be repaid, $500,000; eligible borrowers can ask for "targeted" emergency grant of up to $15,000, Working capital purposes, including payment of fixed debts, payroll, and accounts payable, "Disaster-related purposes" to support the survival and/or reopening of the small business. Please visit some of our family of sites at: Effective March 25, 2020, SBA expanded the program to apply nationwide. PPP loans are 100% guaranteed by the government through September 30, 2021. The tests cover such subjects as forms of ownership, physical descriptions, valuation and regulation. As an Ebby Halliday client, youll benefit from knowledgeable, respected agents and a team of trusted professionals dedicated to making buying or selling your We have developed a library of resources in our COVID-19 resource center to help you stabilize today and prepare for tomorrow. Create an account to follow your favorite communities and start taking part in conversations. The following non-payroll costs are forgivable: Eligible mortgage interest costs include payments for any indebtedness or debt instrument incurred in the ordinary course of business that is a liability of the borrower, is a mortgage on real or personal property, and was incurred before February 15, 2020 (but not any prepayment or payment of principal). A real estate agent has called out her landlord clients for jacking up the rent too much, with stunned tenants welcoming the 'brutal truth' of her comments.