These lenders will be handling the PPP application process. Please see the following statements C.A.R. 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. New to real estate and Carolina Ones James Island office, Arnold is the owner of a small business specializing in Live Edge Furniture and Home Dcor. The Act extends the deadline to apply for a PPP loan to May 31, 2021. For example, if youre looking to change your business structure from a sole proprietorship to an S corporation, you will first need the approval of the SBA. The best option is to contact the lender to arrange returning any portion of the loan in excess of what can be forgiven. For more information about the Loan Necessity Questionnaire, please refer to question #53 of. What forms do sole proprietors need to provide to the lender to apply for a PPP loan? For more information about the Loan Necessity Questionnaire, please refer to question #53 of this document. 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. ", 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. Do I need to submit any additional supporting documentation with my loan forgiveness application? I'm a Paperless Agent subscriber and appreciate ALL the information and support you provide us with - THANK YOU! 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 SBA 7(a) loan is often the best type of SBA financing for independent real estate agents and small to mid-size brokerages. Real Estate Agents and Managers Pursuant to guidance from the Department of the Treasury, CPAs are not supposed to charge fees for assistance in preparation of a PPP loan application. 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. Most brokers will qualify for EIDLs. For the formula to calculate the maximum PPP loan you are eligible for, see the Application Process section below. 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. Required fields are marked *. Additionally, many financial technology (FinTech) companies have started processing PPP loan applications. Before you agree to a loan, be sure that you are aware of and understand EIDL loan terms and requirements adequately. 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. We will provide additional information and guidance if it becomes available. ($100,000 12 * 2.5). Repayment plans are available up to 30 years as determined on a case-by-case basis. Mary Girsch-Bock is the expert on accounting software and payroll software for The Ascent. (Note: The SBA wants to collect this information for tracking purposes. For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. However, emergency grants will now be targeted, meaning that the eligibility criteria are more restrictive. All rights reserved. Have used or will use the full amount of their initial PPP loan. WebTake this free practice test to see how prepared you are for a real estate agent certifying exam. Step 3: Multiply the average monthly gross income or net profit amount from Step 2 by 2.5. Step 2: Calculate the average monthly amount (divide the amount from Step 1 by 12). I tried to apply for a PPP loan at my bank, but the bank refused to consider my application or rejected it. However, 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. We recommend putting the PPP loan funds into a separate bank account to make it easier to track them. Prior to May 4, the SBA had closed EIDL applications in order to work through the previous application backlog. Rupal Shah, Your email address will not be published. Payment deferment until: (a) whenever the amount of loan forgiveness is remitted to the lender; or (b) 10 months after the applicable forgiveness covered period if a borrower does not apply for forgiveness during that 10month period. 6401 Congress Ave Ste 250Boca Raton FL 33487 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. What is an Economic Injury Disaster Loan, and who qualifies? WebLearn critical details of the benefits offered to real estate agents including: Unemployment Benefits, Economic Disaster Loans/Grants (EIDL) and the Payroll Protection Program Substantial economic injury means the business is unable to meet its obligations and pay its ordinary and necessary operating expenses. The SBA is stating that PPP loan forgiveness for payroll costs for sole proprietors without employees is limited to: (i) proprietor expenses when calculating your PPP loan using the gross income formula; and (ii) owner income replacement when calculating your PPP loan using the net profit formula. (Like an emergency grant that is available within 3 days of applying even if you haven't been approved yet!). Janover Get Quotes. WebSBA Economic Injury Disaster Loans (EIDL) are eligible for Rental Property Owners. 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. Businesses that were not in operation on or before February 15, 2020 are not eligible for second draw PPP loans. However, government officials have stated that the PPP process will be significantly expedited. Schedule. Create an account to follow your favorite communities and start taking part in conversations. We will continue to update this FAQ as any rules or other guidance are provided. 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 To apply for forgiveness of your PPP loan, you must complete the application and submit it to your lender. Read more: PPP eligibility and how small businesses can use the funds. 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. has not paid and will not pay the companies any compensation whatsoever for the level of service they have committed to providing. Since the form is already provided by the borrower at the time the PPP application is submitted, no additional documentation will need to be submitted by the borrower to obtain forgiveness for the portion of the loan used as the borrowers income replacement. Members should expect that reporting PPP loan proceeds will reduce benefits for those weeks. They may not be used to refinance long term debt. (Note: The cap is based on 8 weeks worth or $15,385, whichever is less, for an 8-week Covered Period.). If you qualify, filling out the EZ version of the loan forgiveness application is the preferred option because it is shorter and less complicated than the full application. The United States Small Business Administration (SBA) delegates the authority to make PPP loans to numerous lenders throughout the country. 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. by Mary Girsch-Bock | But now, instead of eight weeks worth of average 2019 or 2020 weekly cash compensation (a max of $15,385 per individual), you can get loan forgiveness for up to 24 weeks worth of average weekly 2019 or 2020 cash compensation, making the new maximum forgiveness cap $46,154 for cash compensation per individual employee. Webhttps://crumrealestate.comHere is information to help Independent Contractors get through the Coronavirus epidemic. Go to your Schedule C (Form 1040) and find your net profit on line 31. WebTax Ease is one of the top lenders for Texas Property Tax Loans for both commercial and residential properties. Independent contractors who have been adversely impacted by the COVID-19 emergency are eligible. 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. 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. sba7a.loans is an independently owned and operated website and has, https://www.sba7a.loans/sba-7a-loans-small-business-blog/how-do-commercial-real-estate-loans-work, Must be able to pay the loan agreement in a time frame based on the companys projected operating cash flow, Must not have funds available from other sources, Business must be located in and operate within the United States and/or U.S. territories, Must not invest or speculate, or be in the business of owning rental real estate for profit, Must have a tangible net worth of less than $15 million and an average net income of less than $5 million after taxes for the preceding two years. This means that theoretically, businesses will not be able to take out dividends for over 30 years if they In our next piece, we also cover two big tax options real estate brokers can use to provide further relief. The following options are available to brokers: Are California Relief Grants available for brokers from the state of California? 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. Formula for sole proprietors with employees. And once youre done, you just submit the application and wait for a response, which includes a loan quote. Eligible costs are only those costs incurred due to the COVID-19 pandemic and the health and safety restrictions such as business interruptions or business closures incurred as a result of the COVID-19 pandemic. Although disaster loan assistance is available for up to $2 million, the EIDL for COVID-19 was capped at $150,000. There are strict guidelines about what you can and cannot use EIDL loans for. Check with your bank to determine if it is currently offering EBLs and to see if you qualify. Eligible operations expenditures include payments for any software, cloud computing, and other human resources and accounting needs. Calculate your average monthly payroll cost and multiply that number by 2.5. In addition to revising the. Our experts love this top pick,which featuresa0% intro APRuntil 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. How Much Does Home Ownership Really Cost? Check with your lender to determine if you will be required to submit a paper version of the certification or if the lender will be offering an electronic certification. How do real estate firms calculate their maximum PPP loan amount? CARES Act II expressly prohibits lenders from requiring any documentation to be submitted by the borrower to obtain forgiveness for loans under $150,000 beyond the items above. 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). Applicants will be contacted directly by SBA via email in the coming weeks with instructions to determine eligibility and submit documentation. There is nothing preventing a borrower from spending all PPP loan proceeds immediately upon receipt. Our accounting firm speculates it could be another 3-4 weeks. The CARES Act II signed on December 27 creates a simplified loan forgiveness application process for loans under $150,000. All independent contractors and sole proprietors without employees will be able to use this short certification form, since their loans were capped at $20,833. Tax forms (or equivalent third-party payroll service provider reports for the periods that overlap with the Covered Period. However, it is possible the state law will be changed to conform with the new federal law. Apartment Loans,HUD Loans, will provide updates when we receive more information. If your loan was too high (for example, if you received more than $20,833 despite not having any employees), then it might not be possible to obtain full forgiveness. Loans are automatically placed into deferment the first year of the loan, with repayment starting a year from when the initial loan was received. The eligibility requirements for a second draw PPP loan are different than the requirements for an initial PPP loan. The PPP loan program expired as of June 30, 2020, but was extended on July 4, 2020 to August 8, 2020 and there was approximately $130 billion available as of that date. Legislation and regulation Borrowers with loans greater than $150,000 will need to determine whether they can use the EZ version of the forgiveness application or if they must fill out the full version. SBA express loans are a variant of the SBA 7(a) loan that can be approved faster. What is an initial Paycheck Protection Program loan, and who qualifies? Its also a time to reflect back on. The lender may require the EBL borrower to pay the loan, in part or in full, if the borrower is approved for long-term disaster financing (such as an EIDL) that allows loan proceeds to be used for EBL loan reimbursement. How long will it take for me to get a PPP loan after I apply? However, there are some PPP lenders, such as community banks, that are willing to take new customers. Before taking out a loan, be sure to speak with a qualified commercial real estate broker to discuss all of the risks and benefits associated with this type of financing. %PDF-1.6 % You should carefully review the options available to select the SBA loans that will be the best fit for your needs and circumstances. Save my name, email, and website in this browser for the next time I comment. Cybersecurity As an Ebby Halliday client, youll benefit from knowledgeable, respected agents and a team of trusted professionals dedicated to making buying or selling your If youre an independent contractor, you may be under the impression that the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program dont apply to you. To identify which program(s) youre eligible for, work with your lawyer and an accountant like Wipfli. The grant amount will be based on the businesss annual revenue as documented in its most recent tax return. We are not affiliated with the Small Business Administration (SBA). hbbd``b`~$ *3z B $b .H "AG PPP loans are offered on highly favorable terms for borrowers: They are forgivable, they are guaranteed by the government, and payments are deferred. 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. For businesses established after the third quarter of 2019, the SBA compares revenue from any 2020 quarter to the fourth quarter of 2019. An EIDL can help small business owners weather the COVID-19 storm. 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. All Best Mortgage Lenders for First-Time Homebuyers. HUD 221d4 Loan, Does the calculation of payroll costs include the amount of commission I pay agents and report on a 1099 form? If you need assistance completing the PPP application, C.A.R. Therefore, please keep in mind that it is not certain you will receive a grant even if you apply and meet all eligibility requirements. If you need to visit the SBA directly please click here: sba.gov. This loan program can be used to build your real estate office, purchase commercial real estate, modernize facilities, improve energy efficiency, and more. Eligible rent costs include payments for rent obligations on real or personal property under a leasing agreement in force before February 15, 2020. So whatever you do, make sure you are applying for these stimulus packages and make sure a professional is helping you so you can make sure you are doing this right and getting the most out of it. Click below for a free, no obligation quote and to learn more about your loan options. You tax returns schedule C they will correlate with your profit and loss! Read through - EIDL eligibility criteria starts at page 64. How long will it take for me to get an EIDL after I apply? 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. Other SBA loan options include SBA express loans and SBA microloans. Businesses with fewer than 500 employees including sole proprietors, independent contractors, and other self-employed individuals all qualify for initial PPP loans. We have not reviewed all available products or offers. How much money can I receive for an EIDL loan? The Economic Injury Disaster Loan or EIDL is designed for businesses with fewer than 500 employees. 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). 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 actual loan size borrowers receive will be determined by a formula based on average total monthly payroll costs over a one-year period. Borrowers with loans under $150,000 who fill out the short-form certification will not need to submit additional documentation to obtain forgiveness. The commission is negotiable and is typically split between the sellers agent and buyers agent at 3% each. This means real estate industry PPP loan borrowers should be able to qualify for the EZ Version of the loan forgiveness application if they didnt reduce employee salaries by more than 25% during the Covered Period. This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. Please be advised that you are not required to seek services from any of the companies suggested. To further ensure PPP loan forgiveness, its important to keep detailed records so you can track where the funds went. PPP applications already reopened the week of January 11 for community development financial institutions. Likewise, if your deep fryer goes on the fritz, or your roof springs a leak, youll have to rely on other funds to take care of those repairs.

California Association Of Realtors Purchase Agreement, Articles E