company. The SBA refers to this as owner income replacement.. Where can I apply for an EIDL, and what information do I need? Real estate agents can use SBA 7(a) loans for buying or maintaining a vehicle, refinancing business debt, and expanding a real estate brokerage. Press question mark to learn the rest of the keyboard shortcuts. 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. SBA 7(a) Loans is a For the formula to calculate the maximum PPP loan you are eligible for, see the Application Process section below. In response to the COVID-19 pandemic, the CARES Act established eligibility for two SBA loan programs: Section 7(a) Payroll Protection Program loans (PPP) and What Types of Homeowners Insurance Policies Are Available? 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. Gross receipts includes all revenue in whatever form received or accrued (in accordance with the borrowers accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. If youre an independent contractor, you may be Additionally, borrowers can obtain full loan forgiveness if 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 COVID-19 related operating restrictions, as long as they do not reduce salaries or hourly wages by more than 25 percent for any employee during the Covered Period compared to the period between January 1, 2020 and March 31, 2020. 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. 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 Once approved, money is usually transferred to your bank account, using the banking information that you provided in the application. If the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued. From your 2019 or 2020 IRS Form 1040 Schedule C, you may elect to use either your line 7 gross income amount or your line 31 net profit amount. 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. Updated Aug. 5, 2022 - First published on May 18, 2022. It is typically offered at much lower interest rates than 7(a) loans. Use r/TargetedEIDL for advance/grant issues. Real estate agents can use a Small Business Administration (SBA) 7 (a) loan to purchase real estate, buy or construct buildings, modernize their facilities, I received an email for a loan processor asking for a couple of things from me. 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. For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. Eligibility requirements are fairly broad, so chances are good that your business will qualify if designated as one of the following: The 500-employee maximum applies to all the business types listed above. And because the SBA requires you to save the receipts of any purchases made with EIDL loan monies, you must track these purchases properly. The only portion of the loan that was able to be forgiven was the advance, which is no longer available. 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). Heres the simplified three-step process: Heres an example of the PPP loan calculation in action. All Rights Reserved. If you choose to apply for assistance, work with your lender to apply as soon as possible. Real-estate brokers, are you looking for clarity around what help youre eligible for during the COVID-19 crisis? (office fees, advertising, cellphone, high speed internet, licensing fees, and real estate board fees?). Your lender may have additional instructions for submitting the PPP loan forgiveness application or may require you to submit additional documentation. 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. Will I need to pay income tax on the PPP loan proceeds if I use the proceeds for income replacement? The SBA will reach out to those who qualify to explain how to receive a targeted EIDL advance. The actual loan size borrowers receive will be determined by a formula based on average total monthly payroll costs over a one-year period. If a borrower is going to claim on the forgiveness application that they tried to rehire an employee but the offer was rejected by the employee, the borrower is required to inform the applicable state unemployment insurance office of the employees rejected rehire offer within 30 days of the employees rejection of the offer. Schedule of liabilities for a real estate agent . To verify payroll costs, you must submit the following documents along with your PPP Loan Forgiveness Application: Bank account statements or third-party payroll service provider reports documenting the amount of Cash Compensation paid to employees. Alternatively, you can submit lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments. How Much Does Home Ownership Really Cost? You do not need to take any action related to this decision prior to filling out the loan forgiveness application. Any other COVID-19 related expenses not already covered through grants, forgivable loans or other relief through federal, state, county or city programs. 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. Alternatively, you can submit lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments. 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. To further ensure PPP loan forgiveness, its important to keep detailed records so you can track where the funds went. 1. If youre an independent contractor, you may be Use r/TargetedEIDL for advance/grant issues. But the funds that were set aside to cover the advance were quickly depleted, with the SBA discontinuing the advances in July of 2020. 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. Yes but borrowers cannot take out an EIDL and a PPP loan for the same purposes. C.A.R. Apartment Loans,HUD Loans, The contractor must have been engaging in business when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements. Many real estate agents may find that the SBA 7(a) program, the Small Business Administrations most commonly used loan program, is the best fit for their needs. Starting the week of April 6, 2021, the SBA is raising the loan limit for the EIDL program from 6 months of economic injury with a maximum loan amount of $150,000 to 24 months of economic injury with a maximum loan amount of $500,000. While the SBA states that the application can be completed in around two hours, others have stated that it took them around 45 minutes to an hour to complete. ($100,000 12 * 2.5). Many brokers structure their businesses as S Corporations and pay themselves salaries from the corporations funds. 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. | Terms & Conditions, $20,833.33 initial loan and $20,833.33 second draw loan for independent contractors without employees. 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. 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. recommends seeking a CPA to provide that assistance. No contract, cancel at any time. PPP loan proceeds, EIDL advances, and direct payments from the IRS (e.g., tax refunds, rebates, stimulus or economic impact payments pursuant to the CARES Act) should not be included in gross receipts. If you have the documentation available when applying for the loan, submitting it when applying will be preferable since it will simplify the forgiveness process once you reach that stage. I heard that the SBA was offering EIDL emergency grants of up to $10,000 that did not need to be repaid. Multifamily Minute Reader Reflections: When Do You Start the Refi Process? HUD 221d4 Loan, %%EOF Read more: PPP loans: Proper documentation and accounting. How much money can I borrow with an EBL, and what are the terms of the loan? Because PPP is an expansion of the already-existent 7(a) program, the financial institutions that offer 7(a) loans will be offering PPP loans as well. are not eligible for multiple grants and are only allowed to apply once using their eligible small business with the highest revenue. Get Quotes. 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 In addition to revising the full forgiveness application, SBA also published a new EZ version of the forgiveness application. Click here to read now. How do I calculate my maximum PPP loan amount if I am a sole proprietor with employees? An attestation that the loan was used in compliance with the law. As long as you did not receive a larger PPP loan than you are eligible for, this should not have any impact on loan forgiveness. Real Estate Agents and Managers Your lender may have additional instructions for submitting the PPP loan forgiveness certification. The interest rate on an EIDL loan is 3.75% APR (fixed) with a 2.75% APR available for nonprofit organizations. Additionally, if the propertys value decreases, you could find yourself underwater on your loan owing more than the property is worth. HUD 232 Loan, How will the decision be made as to who receives a grant? A government guarantee reduces the risk to the borrower. EIDL loans carry a low interest rate and a 30-year repayment term and can offer a lifeline to struggling small businesses. In comparison, microloans are loans designed for smaller, startup businesses, and are offered in amounts of up to $50,000. Independent contractors and sole proprietors are also eligible. 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. 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. Before you apply for a PPP loan, it is important to review the options with your CPA or financial advisor. 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. WebAs of September 8, 2021, new COVID-19 EIDL policy changes took effect as follows: Maximum loan cap increased from $500,000 to $2 million. You can borrow up to $25,000, which can be used for disaster-related purposes to support the survival and/or reopening of your business. For annual revenues greater than $100,000 up to $1,000,000, the available grant amount is $15,000. 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. f`~5U Any thoughts on what to do here? In our next piece, we also cover two big tax options real estate brokers can use to provide further relief. PPP loans are 100% guaranteed by the government through September 30, 2021. 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. Weve all come to expect an overly complicated process when it comes to anything associated with government programs. The SBA is only allowing the gross income formula to be used for loans approved on or after March 3, 2021. You'll probably be fine. Borrowers with employees may have costs that fall into this category. Formula for sole proprietors with employees. 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. Learn more about this loan, including qualifications and how to apply. If you only have a personal checking account, these lenders will still not accept your PPP application. 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. For more information about the Loan Necessity Questionnaire, please refer to question #53 of. 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. 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 If a member doesnt report loan proceeds and they are eventually determined to be reportable income, EDD may seek to recover amounts paid plus penalties. Applicants with multiple business entities, franchises, locations, etc. Borrowers with loans under $150,000 who fill out the short-form certification will not need to submit additional documentation to obtain forgiveness. The EIDL loan application is streamlined for easy completion. A borrower may submit a loan forgiveness certification or application any time on or before the maturity date of the loan, including before the end of the Covered Period, Since this amount (whether you used the gross income or net profit loan calculation method) is equivalent to the maximum PPP loan size for borrowers without employees, these borrowers are able to classify 100% of their PPP loan proceeds as forgivable payroll costs.. We are a technology company that uses software and experience to bring lenders and borrowers together. Using line 7 gross income will usually lead to a higher loan calculation, so it will be preferred for most sole proprietors. As real estate agents, we are exactly who these legislations were designed to help. Right now, the EIDL can cover up to six months of working capital or operating expenses, with a cap of $150,000, provided that your business qualifies. They are currently available to small businesses with fewer than 500 employees, including sole proprietors, independent contractors and other self-employed individuals. 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. Compensation may impact the order of which offers appear on page, but our editorial opinions and ratings are not influenced by compensation. Borrowers must make a good-faith certification that the PPP loan is necessary and should document those needs with the filing of the application. We will continue to update this FAQ as any rules or other guidance are provided. (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. between $1,000 - $9,000) and will later reach out to those who applied for EIDL assistance on or before December 27, 2020 but did not receive an EIDL advance due to lack of program funding. How do real estate firms calculate their maximum PPP loan amount? What happens if I previously had an EIDL advance deducted from my PPP loan forgiveness? If you think that an EIDL loan may be right for your business, your first step should be to make sure that your business qualifies for a loan. The grant amount will be based on the businesss annual revenue as documented in its most recent tax return. No. Must be impacted by COVID-19 and the health and safety restrictions such as business interruptions or business closures incurred as a result of the COVID-19 pandemic. WebTax Ease is one of the top lenders for Texas Property Tax Loans for both commercial and residential properties. 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. 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. (Like an emergency grant that is available within 3 days of applying even if you haven't been approved yet!). However, government officials have stated that the PPP process will be significantly expedited.