You will choose the length of the Covered Period for your loan when you fill out the PPP loan forgiveness certification or application. Most brokers will qualify for EIDLs. Can I apply for both a PPP loan and an EIDL loan? Expanding a real estate brokerage: If you need to hire new employees or expand your marketing efforts, SBA 7(a) loans are a great choice. A small business must satisfy the following criteria to be eligible to receive a grant award: Must be a sole proprietor, independent contractor, or registered for-profit business entity (e.g., C-corporation, S-corporation, limited liability company, partnership) that has yearly gross revenue of $2.5 million or less (but at least $1,000 in yearly gross revenue) based on the most recently filed tax return. CMBS Loans, The borrower can spend the owner income replacement portion of the PPP loan on anything the borrower chooses. 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. The PPP also comes with usage restrictions. These lenders will be handling the PPP application process. 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. Applicants with multiple business entities, franchises, locations, etc. You should carefully review the options available to select the SBA loans that will be the best fit for your needs and circumstances. See our step-by-step guide on applying for an EIDL. Will I need to pay income tax on the PPP loan proceeds if I use the proceeds for income replacement? This may help you. The SBA is only allowing the gross income formula to be used for loans approved on or after March 3, 2021. How can I apply for a targeted EIDL advance? Get Quotes. No. The remainder of the loan that is not forgiven (if any) will operate according to the loan terms described in the Loan Terms section above. You cannot apply for PPP loans on the SBA website. C.A.R. Borrowers are required to make a good faith certification that they have been affected by COVID-19 and will use funds to retain workers and maintain payroll and meet other debt obligations. Personal finance. Loan forgiveness means that you are not required to repay your loan. A streamlined online application for EIDL loans has been made available by SBA at the following link: https://covid19relief.sba.gov/. 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. 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). 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:https://www.sba.gov/paycheckprotection/find. 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. While taking out any loan requires serious consideration, an EIDL loan offers good repayment terms, a low interest rate, and an easy application process. SBA will reach out directly via email and provide more details about how businesses can request an increase close to the April 6 implementation date. If you are applying for a second draw PPP loan, the best option may be to work with the lender that provided you with the initial PPP loan. Standard SBA Loans are not available for passive income (except Hotels and Self 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. The following options are available to brokers: Are California Relief Grants available for brokers from the state of California? Understanding Homeowners Insurance Premiums, Guide to Homeowners Insurance Deductibles, Best Pet Insurance for Pre-existing Conditions, What to Look for in a Pet Insurance Company, Marcus by Goldman Sachs Personal Loans Review, The Best Way to Get a Loan With Zero Credit. Real Estate Agents and Managers. The contractor must have been engaging in business when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements. Please visit some of our family of sites at: has released to the press on the novel coronavirus: March 12, 2020: California REALTORS expect coronavirus to impact housing market. 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. How much money can I receive for an EIDL loan? Consult with your accountant if you need assistance determining your gross receipts, and/or refer to SBAs FAQ document available here. It is typically offered at much lower interest rates than 7(a) loans. 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. Yes, in some cases. 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 SBA has an online guide, which is available here: https://www.sba.gov/funding-programs/disaster-assistance. The federal government, through the SBA, is providing significant relief for small businesses suffering from the impact of the COVID-19 pandemic. 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. 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. How do real estate firms calculate their maximum PPP loan amount? Substantial economic injury means the business is unable to meet its obligations and pay its ordinary and necessary operating expenses. Real Estate Agents and Managers WebWe have been helping real estate agents and title companies with their foreign national clients for almost 20 years. 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. These companies are not in any way reviewed, supported or endorsed by C.A.R. 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. No contract, cancel at any time. SBA Express Loans, SBA 504 Loans, If the first disbursement is not made within 90 days from receipt of an SBA loan number, the EBL loan will be canceled. So, while the housing market may be hot, theres a ton of competition to contend with. Eligible utility costs include payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020. Though SBA disaster loans have been available for years, the EIDL was signed into law in March of 2020 as part of the CARES Act, which was passed by Congress to provide emergency relief to American workers and small businesses struggling to survive due to the impact of COVID-19. SBA 7(a) Loans is a Nothing on this website is an offer or a solicitation for a loan. %PDF-1.6 % If your business has been hurt by COVID-19, it may be worth applying for an EIDL loan. Proprietor expenses are defined as business expenses plus owner compensation and are calculated based on a proportionate share of the borrowers 2019 or 2020 gross income, as reflected in the individuals 2019 or 2020 Form 1040 Schedule C. Owner income replacement is calculated based on a proportionate share of the borrowers 2019 or 2020 net profit, as reflected in the individuals 2019 or 2020 Form 1040 Schedule C. The SBA has clarified that borrowers can now attribute up to 2.5 times their 2019 or 2020 IRS Form 1040 Schedule C average monthly gross income as proprietor expenses and up to 2.5 times average monthly net profit as owner income replacement.. 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. Go to your Schedule C (Form 1040) and find your net profit on line 31. 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. To verify non-payroll costs, you must submit: For mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the covered period. 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. Its a time for family, friends and creating lasting memories. An EIDL can help small business owners weather the COVID-19 storm. Will my PPP loan forgiveness be reduced if I lay off employees or reduce their salaries? Community Banks, Credit Unions and Community Development Financial Institutions**, Search for community banks based on your Zip Code: https://www.icba.org/about/find-a-community-bank, List of credit unions in California: https://www.creditunionsonline.com/california-credit-unions.html, List of community development financial institutions (Excel spreadsheet that you can sort to list California institutions): https://www.cdfifund.gov/Documents/CDFI%20Cert%20List%2004-14-2020%20Final.xlsx, List of 2019 Top 100 U.S Small Business Administration (SBA) Lenders: https://www.sbalenders.com/most-active-sba-banks-in-2019-mid-year-review/, SmartAsset.com evaluation of PPP lenders: https://smartasset.com/insights/ppp-loan-lenders. Before you apply for a PPP loan, it is important to review the options with your CPA or financial advisor. "Payroll costs" include net profit of independent contractors. Weve all come to expect an overly complicated process when it comes to anything associated with government programs. 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. Your net profit for 2019 was $230,000. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); The Commission Calculator is Available NowThe Commission Calculator was created to help you understand what milestones you need to reach to hit your commission goal. 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. The result is the amount of PPP loan funding that youre eligible for. If you would like to submit content or write an article for the Real Estate & Land Use Section, please email Kara Sikorski at ksikorski@indybar.org. If I received an EIDL advance, will the amount of the advance be deducted from my PPP loan forgiveness? The Act extends the deadline to apply for a PPP loan to May 31, 2021. Reddit and its partners use cookies and similar technologies to provide you with a better experience. SBA will loan borrowers up to $2 million for an initial PPP loan and up to $2 million for a second draw PPP loan. Calculate your average monthly payroll cost and multiply that number by 2.5. 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. Borrowers can exclude from loan forgiveness calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. For a complete FAQ about the California COVID-19 relief grant program, please refer to this page: 2021Copyright CALIFORNIA ASSOCIATION OF REALTORS. Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. list of mortuary science schools in kenya. 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. To apply for forgiveness of your PPP loan, you must complete the certification and submit it to your lender. 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. Is SIC code 6531 eligible for EIDL loan? We are a technology company that uses software and experience to bring lenders and borrowers together. Thats why the EIDL loan application is such a pleasant surprise. These are sample forms which illustrate the information you will need to apply for a PPP loan. 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. The one-page certification form requires the borrower to provide: The number of employees retained by use of the loan. buHX M@B `l&FZ#R ?a No. The proprietor expenses or owner income replacement portion of the PPP loan can be spent by the borrower on anything, at any time. |, California REALTORS expect coronavirus to, https://www.sba.gov/paycheckprotection/find, https://www.loanbuilder.com/ppp-loan-support, https://www.kabbage.com/paycheck-protection-program-loans/, https://getdivvy.com/covid-19/sba-ppp-loans/assistance/, https://sba.credibly.com/apply-online/?utm_medium__c=cpc&utm_source__c=google&utm_campaign__c=11-seg-brd-des&utm_term__c=11_bmm_credibly&utm_content__c=easy_responsive, https://www.biz2credit.com/disaster-support/cares-act-loans-coronavirus, https://unionbank.avoka-transact.com/workspace/servlet/SmartForm.html?formCode=ppp-loan, https://squareup.com/us/en/l/sba-ppp-loans, https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/, https://www.icba.org/about/find-a-community-bank, https://www.creditunionsonline.com/california-credit-unions.html, https://www.cdfifund.gov/Documents/CDFI%20Cert%20List%2004-14-2020%20Final.xlsx, https://www.sbalenders.com/most-active-sba-banks-in-2019-mid-year-review/, https://smartasset.com/insights/ppp-loan-lenders. What is an initial Paycheck Protection Program loan, and who qualifies? On March 30, President Biden signed the PPP Extension Act. Yes but borrowers cannot take out an EIDL and a PPP loan for the same purposes. Read more: PPP eligibility and how small businesses can use the funds. Prior to May 4, the SBA had closed EIDL applications in order to work through the previous application backlog. 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. Schedule of liabilities for a real estate agent . The Ascent does not cover all offers on the market. What is a second draw Paycheck Protection Program loan, and who qualifies? 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. Using line 7 gross income will usually lead to a higher loan calculation, so it will be preferred for most sole proprietors. Independent contractors who have been adversely impacted by the COVID-19 emergency are eligible. Image source: Author. Click below for a free, no obligation quote and to learn more about your loan options. Cybersecurity Which of the SBA loans should I apply for? Both of these loan programs offer a number of advantages for real estate agents. 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. 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. 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. (Like an emergency grant that is available within 3 days of applying even if you haven't been approved yet!). Best Mortgage Lenders for First-Time Homebuyers. This is because 7(a) loans can be are incredibly flexible, and can used for working capital, equipment, and owner-occupied commercial real estate. Other SBA loan options include SBA express loans and SBA microloans. 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. C.A.R. Construction and Real Estate, The grant amount will be based on the businesss annual revenue as documented in its most recent tax return. Subscribe to Real Estate & Land Use Section news 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. PPP applications already reopened the week of January 11 for community development financial institutions. The eligibility requirements for a second draw PPP loan are different than the requirements for an initial PPP loan. 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. 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. What are the risks if I do? All EIDL loans carry a term of 30 years, with an interest rate of 3.75%. 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. A California law passed on September 9 stated that expenses paid with forgiven PPP loan proceeds cannot be deducted for state income taxes. You must also provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020. 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. The SBA instituted this rule to serve as an additional deterrent to fraud, waste, and abuse.

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