For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. Commercial Real Estate Loans,SBA7a Loans, Effective March 25, 2020, SBA expanded the program to apply nationwide. The real estate industry was adversely affected by statewide and local orders that were put in place in response to the COVID-19 pandemic. Option 1: Economic Injury Disaster Loans (EIDL) Businesses with 500 or fewer employees including sole proprietors, independent contractors and cooperatives A government guarantee reduces the risk to the borrower. Will this affect my PPP application? Multifamily Minute Reader Reflections: When Do You Start the Refi Process? ", For the Emergency Injury Disaster Loan (EIDL):This loan is very different from the Payroll Protection Plan (PPP) because there are very specific things you can cover with this loan. Businesses that have experienced substantial economic injury are eligible for an EIDL. Regardless of whether you have filed a 2019 or 2020 tax return with the IRS, sole proprietors must provide the 2019 or 2020 Form 1040 Schedule C (depending on which year you used to calculate your maximum loan amount) with your PPP loan application to substantiate the applied-for PPP loan amount. Press J to jump to the feed. WebThe standard, fair commission for a real estate agent is 6% of the home's sale price. WebReal Estate Agent is a small business received COVID-19 Targeted EIDL Advance and Supplemental Targeted Advance from U.S. Small Business Administration (SBA), Office of Entrepreneurial Development. Before you apply for a PPP loan, it is important to review the options with your CPA or financial advisor. There are 2 programs, that we can take advantage of as real estate agents, that allow us to continue to operate despite what's going on: Because of the new legislation, independent contractors and sole proprietors now qualify to take advantage of these programs! abnormally high interest rates or fees), you may be able to use an SBA 7(a) loan to refinance it. I need help completing my PPP application. 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. According to the Department of the Treasury, the lender must make the first disbursement of a PPP loan no later than ten calendar days from the date of loan approval. Head to the COVID Legal Documents page on car.org for access to: Step-by-Step Guide to PPP Loan Forgiveness for Borrowers With Employees, Step-by-Step Guide to PPP Loan Forgiveness for Borrowers Without Employees. by Mary Girsch-Bock | 0 A borrower may request that the SBA review the lenders decision regarding forgiveness of the loan in the event that the lender determines that the borrower is not eligible for forgiveness. Any unforgiven amounts will be considered loans with the following terms: A 1.00% interest rate (non-compounding and non-adjustable). Go to your Schedule C (Form 1040) and find your net profit on line 31. Real Estate Agents and Managers The program provides micro grants ranging from $5,000 to $25,000 to eligible small businesses (including independent contractors and sole proprietors) impacted by COVID-19 and the related health and safety restrictions. This will determine loan amount! What Types of Homeowners Insurance Policies Are Available? Economic Injury Disaster Loans (EIDLs) are targeted, low-interest loans to small businesses that have been severely impacted by the coronavirus. When will I know if my PPP loan is forgiven? The first two rounds for applications for the relief grant program were in January and February, and those awarded grants in those rounds were already notified. WebCOVID EIDL Loans Information as of September 8, 2021 Contents Introduction Section 1: COVID EIDL Program Information Section 2: Submitting a New COVID EIDL Application Refinancing business debt: If youve taken out a small business loan to fund your business, and the debt is currently on unreasonable terms (i.e. Must be an active business operating since at least June 1, 2019. Webhow long can a dog live with parathyroid disease. Consult with your accountant if you need assistance determining your gross receipts, and/or refer to SBAs FAQ document available, Once received, the loans may be used by brokers for payroll costs (including paid sick leave), employee salaries, insurance premiums (including health, group life, vision, and dental insurance premiums), rent expenses, mortgage expenses, utility expenses, PPE expenses, operations expenses, property damage costs, supplier costs, and other debt obligations. Calculating how much youre entitled to as an independent contractor has a formula to it. Your net profit for 2019 was $230,000. For businesses established after the second quarter of 2019, the SBA compares revenue from any 2020 quarter to revenue from the third or fourth quarter of 2019. You should consult with your tax advisor to see how PPP loan forgiveness may affect you and your business. Borrowers with loans under $150,000 who fill out the short-form certification will not need to submit additional documentation to obtain forgiveness. In addition, the loan immediately goes into deferment, so you have a year before you need to start repaying the loan, although the SBA gives you the option to start repaying it immediately. If you have additional expenses that will not be forgiven if spent with PPP loan proceeds, an Economic Injury Disaster Loan (EIDL) may be a good option. Its available to small businesses, small agricultural cooperatives, and most private nonprofits in a disaster area that have suffered substantial economic damage. You tax returns schedule C they will correlate with your profit and loss! An EIDL can help small business owners weather the COVID-19 storm. Step 2: Calculate the average monthly gross income or net profit amount (divide the amount from Step 1 by 12). This means that you can use the proceeds of the PPP loan to pay your employees, but not any of your agents who are independent contractors. The SBA is launching a new round of economic injury disaster loan (EIDL) Advances called Targeted EIDL Advance which provides eligible businesses with What can I use the PPP loan proceeds for? You must also provide a 2019 or 2020 IRS Form 1099-MISC (depending on which year you used to calculate your maximum loan amount) detailing nonemployee compensation received (box 7), or an invoice, bank statement, or book of record that establishes you are self-employed. You will need to provide the following information as part of the application process: General information about the business, including EIN (or SSN for a sole proprietorship), Gross revenues for the 12 months prior to the date of the disaster (which SBA designates as Jan. 31, 2020), Cost of goods sold for the 12 months prior to the date of the disaster, Personal and contact information for business owners, Information about where to send funds (bank name, account number, and routing number). All Will my PPP loan forgiveness be reduced if I lay off employees or reduce their salaries? 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. As real estate agents, we are exactly who these legislations were designed to help. Businesses that were not in operation on or before February 15, 2020 are not eligible for second draw PPP loans. In our next piece, we also cover two big tax options real estate brokers can use to provide further relief. When do I have to begin and end using PPP loan proceeds to qualify for forgiveness? Payment deferment means that you are not required to immediately begin making payments to the lender. 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. Underserved small business groups served by the state-supported network of small business centers (i.e., businesses majority owned and run on a daily basis by women, minorities/persons of color, veterans and businesses located in low-to-moderate income and rural communities). For more information about the Loan Necessity Questionnaire, please refer to question #53 of. If your financial projections are looking grim, it might be worth considering applying for an EIDL loan before the December 21, 2020, deadline arrives. Any forgiven PPP loan proceeds do not need to be reported as gross income by the borrower for federal and state income taxes. If this amount is zero or less, you are not eligible for a PPP loan. (office fees, advertising, cellphone, high speed internet, licensing fees, and real estate board fees?). If youre an independent contractor, you may be under the impression that the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program dont apply to you. Best Homeowners Insurance for New Construction, How to Get Discounts on Homeowners Insurance. Read more: SBA PPP loan economic uncertainty certification. The advance face value is For a complete FAQ about the California COVID-19 relief grant program, please refer to this page: https://careliefgrant.com/50440-2/. 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. All states require real estate agents to be licensed by the state to engage in the sale of real estate. So, while the housing market may be hot, theres a ton of competition to contend with. SBA express lenders are only allowed to make EBL loans to eligible borrowers with which the lender had an existing banking relationship on or before the date of the applicable disaster. Where can I apply for an EIDL, and what information do I need? Mary Girsch-Bock is the expert on accounting software and payroll software for The Ascent. If the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued. Between March 2020 and February 2021, SBA provided about 3.8 million low-interest EIDL loans and 5.8 million grants (called advances) totaling $224 billion to help Does the calculation of payroll costs include the amount of commission I pay agents and report on a 1099 form? What should I do? How can I apply for a targeted EIDL advance? Required fields are marked *. The full amount of the loan can be up to $500,000, with interest rates of 3.75% for for-profit businesses. Lets say you have a regular, ongoing sole proprietorshipwith no employees, and your businesshas been in operation for at least a full year. 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. However, keep in mind that all loan proceeds for borrowers without employees can be attributed as proprietor expenses or owner income replacement, and there is no need for these borrowers to attribute any of the loan proceeds to the non-payroll costs category. For a complete FAQ about the California COVID-19 relief grant program, please refer to this page: 2021Copyright CALIFORNIA ASSOCIATION OF REALTORS. 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. company. 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. Using line 7 gross income will usually lead to a higher loan calculation, so it will be preferred for most sole proprietors. How will this affect forgiveness? California has announced a new relief grant program for small businesses affected by the COVID-19 pandemic. (Like an emergency grant that is available within 3 days of applying even if you haven't been approved yet!). Cash compensation including salary, wages and tips is capped at $100,000 of annualized cash compensation per employee. SBA express loans are a variant of the SBA 7(a) loan that can be approved faster. The CARES Act II signed on December 27 creates a simplified loan forgiveness application process for loans under $150,000. This loan program can be used to build your real estate office, purchase commercial real estate, modernize facilities, improve energy efficiency, and more. Must be able to provide organizing documents including 2018 or 2019 tax returns or Form 990s, copy of official filing with the California Secretary of State, if applicable, or local municipality for the business such as one of the following: Articles of Incorporation, Certificate of Organization, Fictitious Name of Registration or Government-Issued Business License. You'll probably be fine. 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). SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after the lender issues its decision to SBA. has not paid and will not pay the companies any compensation whatsoever for the level of service they have committed to providing. will update this section if the state law changes. A California law passed on September 9 stated that expenses paid with forgiven PPP loan proceeds cannot be deducted for state income taxes. 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). 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 What is an initial Paycheck Protection Program loan, and who qualifies? 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. Use of funds was expanded to Therefore, it will be more difficult for you to represent that the pandemic itself has had an adverse impact on your business. What are the PPP loan terms for any amounts that are not forgiven? Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid). These are sample forms which illustrate the information you will need to apply for a PPP loan. Will I need to pay income tax on the PPP loan proceeds if I use the proceeds for income replacement? If you run a larger brokerage that wants to use an SBA loan to purchase (or even build) a new headquarters, an SBA 504 loan could be a superior option. This can include payroll tax filing reported (or that will be reported) to the IRS (typically, Form 941); and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported (or that will be reported) to the relevant state. Copyright 2018 - 2023 The Ascent. Licensed real estate agents are statutory nonemployees and are treated as self-employed for all Federal tax purposes, including 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. Most borrowers with employees will also be able to use the EZ version of the forgiveness application, as long as they did not reduce salaries or hourly wages by more than 25 percent for any individual employee during the Covered Period compared to the period between January 1, 2020 and March 31, 2020; AND as long as one of the following is true: (a) They did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period; OR (b) They were unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020 due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 related to COVID-19 (or, for a PPP loan made after December 27, 2020, requirements established or guidance issued before the last day of the Covered Period). FAQs: Small Business Administration (SBA) Loans and Grants for Brokers, California Small Business COVID-19 Relief Grant Program. What is an SBA Express Bridge Loan, and who qualifies? This means sole proprietors without employees will all be able to get their PPP loans fully forgiven simply by filling out and submitting the one-page certification form to their lender. What is the California Small Business COVID-19 Relief Grant Program, and how much money can I receive from the program? Borrowers with loans of $150,000 or greater will need to submit additional documentation to obtain forgiveness. Since then "crickets", and no $$$ in my bank account. Note: Since SBA allows borrowers to use 2019 or 2020 payroll costs to calculate their maximum PPP loan amount for both first and second draw PPP loans originating in 2021, borrowers will want to use the year in which their payroll costs were highest to obtain the largest PPP loan amount. Will employees need to pay taxes on the proceeds that they receive? C.A.R. If you need assistance finding a PPP lender, SBA has created a Lender Match tool that allows you to search for lenders based on your Zip Code: Search for community banks based on your Zip Code: List of community development financial institutions (Excel spreadsheet that you can sort to list California institutions): List of 2019 Top 100 U.S Small Business Administration (SBA) Lenders: The CARES Act II signed on December 27 creates a simplified loan forgiveness application process for loans under $150,000. Our accounting firm speculates it could be another 3-4 weeks. The SBA prohibits you from obtaining an EIDL loan if your business engages in any of the following activities: Other things that may disqualify you from obtaining an EIDL loan is if any principal owner with a 50% or greater interest in your business is more than 60 days late on child support obligations. No. This documentation can be submitted: (i) at the time of the loan application; (ii) on or before the date the borrower submits an application for loan forgiveness; or, (iii) if the borrower does not apply for loan forgiveness, at SBAs request. Yes but borrowers cannot take out an EIDL and a PPP loan for the same purposes. How Much Does Home Ownership Really Cost? If you have already applied for or received an EIDL loan related to COVID-19 before April 3, 2020 and used the loan proceeds to cover payroll costs, you will be able to refinance the EIDL into a PPP loan for purposes of loan forgiveness. Lastly, and very importantly, the SBA instructs that before applying for a PPP loan, borrowers should consider whether their potential access to other sources of liquidity ultimately makes a PPP loan unnecessary to support their ongoing operations. Once your application is completed, a loan officer will review the application, with an approval or decline usually sent within days of the application. 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. Section 179D Energy Efficient Tax Deduction, Internal Audit Outsourcing & Consulting Services, Outsourced CFO, controller and accounting department, Wealth management and investment advisory services, Complete Solution for Job Shops and Contract Manufacturers, Microsoft Dynamics 365 Project Service Automation, Integrate invoice processing & AP automation with Concur Connectors, Connectors for Dynamics 365 Business Central, Real estate brokers: Figuring out your PPP and EIDL eligibility and how to calculate your loan amount, PPP eligibility and how small businesses can use the funds, PPP loans: Proper documentation and accounting, SBA PPP loan economic uncertainty certification, Notice 2022-61: Prevailing wage and apprenticeship requirements for energy credits and incentives, Dont miss out on these tax breaks for the 2021 tax year, Uniform Guidance for DHHS Awards (45 CFR Part 75), Denver-area advisory firm Stratagem joins Wipfli, Wipfli Expands Presence in California as Price Waterman Joins Firm, Wipfli expands into Colorado as Bauerle and Company joins firm. In comparison, microloans are loans designed for smaller, startup businesses, and are offered in amounts of up to $50,000. 2070 0 obj <>stream This second loan is called a second draw PPP loan.. :), Hello! Supplier costs of perishable goods can be made before or during the life of the loan. Although disaster loan assistance is available for up to $2 million, the EIDL for COVID-19 was capped at $150,000. WebComplimentary Self-Defense Class for Real Estate Agents happening at David Hoffman Realty, 10715 Sikes Place, Charlotte, United States on Tue Mar 07 2023 at 10:00 am to 12:00 pm. Such documentation may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the borrowers quarterly income statements or bank statements. In fact, this card is so good that our experts even use it personally. Borrowers with employees may have costs that fall into this category. You can verify eligibility on the first page of the EIDL application. "Payroll costs" include net profit of independent contractors. If you only have a personal checking account, these lenders will still not accept your PPP application. However, for S-corporation owner-employees, owner income replacement is capped at 2.5 times their average monthly employee cash compensation and employer retirement contributions made on their behalf, but employer health insurance contributions made on their behalf cant be separately added because those are already included in cash compensation. Must currently be operating or have a clear plan to re-open once the State of California permits re-opening of the business. Entities eligible for a supplemental targeted advance will be able to receive an additional $5,000 grant. Save my name, email, and website in this browser for the next time I comment. Agents may qualify for their own PPP loans. Construction and real estate Do I need to submit any additional supporting documentation with my loan forgiveness application? UTC-05:00. Therefore, please keep in mind that it is not certain you will receive a grant even if you apply and meet all eligibility requirements. SBA 504 loans are intended for the purchase and construction of owner-occupied commercial real estate, not working capital, and are typically offered at much lower interest rates than 7(a) loans. There are 2 programs, that we can take advantage of as real estate agents, that allow us to continue to operate despite what's going on: Economic Injury Disaster The actual loan size borrowers receive will be determined by a formula based on average total monthly payroll costs over a one-year period. 2019 or 2020 employer health insurance contributions (health insurance component of Form 1040 Schedule C line 14), retirement contributions (Form 1040 Schedule C line 19), and state and local taxes assessed on employee compensation (primarily under state laws commonly referred to as the State Unemployment Tax Act or SUTA from state quarterly wage reporting forms). Please see the following statements C.A.R. How do I calculate my maximum PPP loan amount if I am a sole proprietor without employees?