Begin your PPP loan application through Lendio to be matched with a PPP lender. Of course, sole proprietors will still be able to apply for PPP loans until the program deadline at the end of the month; they just won't get priority treatment once the 14-day exclusivity … My hope is to provide some clarity for sole proprietors across America desperately trying to obtain a PPP loan before the money runs out. Approximately $130 billion in funds are still available to lend to small businesses. If you’re self-employed — as a sole proprietor or independent contractor with no employees — you can still apply for a Paycheck Protection Program (PPP) loan. To make matters worse, many bankers and loan officers have been overwhelmed by the number of applications, the speed of the stimulus roll out and sporadic SBA guidance regarding protocol for sole proprietors. Sources: H.R. When is the deadline to apply for a PPP loan? The deadline for applying for a PPP loan is March 31, 2021. Additional Eligibility Criteria and Requirements for Certain Pledges of Loans for the Paycheck … How should a borrower account for federal taxes when determining its payroll costs for purposes of the maximum loan amount, allowable uses of a PPP loan, and the amount of a loan that may be forgiven? While the official SBA guidance, which be found by clicking here, answers many questions related to eligibility and how to calculate First Draw PPP Loan amounts, each business has unique needs and special circumstances that may not be directly addressed in the document, as determination most likely will require a detailed review of your financial statements, tax returns and other documentation. As COVID-19 (coronavirus) continues to spread throughout the New Orleans metropolitan area, we want to provide you with information on the precautions we are taking to protect the welfare and safety of our clients and staff while still providing the efficiency and quality you expect from Ericksen Krentel. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP. What reference period should I be using to compute my First Draw PPP Loan amount? Only time will tell, and I will be publishing more articles and videos on the topic as the SBA and Treasury Department issue more guidance. Paying workers with a 1099 is NOT having employees. As a reminder, PPP loans are a type of SBA 7 (a) loan created by The CARES Act. You can have a Limited Liability Company (LLC) and still be a sole proprietor or independent contractor. The program, administered by the U.S. Small Business Administration as part of the Consolidated Appropriations Act of 2021 (CAA), can provide eligible recipients up to 45% of their 2019 gross earned revenue. You can apply for both a PPP and EIDL loan. How is the maximum First Draw PPP Loan amount calculated for eligible nonprofits (up to $10 million)? Ericksen Krentel continues to monitor the ever-changing guidance and requirements for the PPP loan application process to assist you in receiving the maximum benefits allowable. The interest rate is still 1 … With the Second Draw Paycheck Protection Program (PPP), small business borrowers can borrow additional funds for COVID-19 relief if they received a first PPP loan. A significant amount of direction has been provided for business owners with payroll, but how do self-employed individuals actually pay themselves in order to comply with the law? These Are Some Possible Timelines for the Next Coronavirus Stimulus Checks. Contractors in operation on February 15, 2020 can apply for the PPP using a completed … For example, if a Sole-Proprietor has the following net-income in 2019, the PPP would be as follows: Again, keep in mind this is tax-free income and can be entirely forgiven if the business owner spends the money according to the guidelines under the CARES Act. If you spend just $100,000 on payroll costs using the $200,000 PPP loan, the maximum forgiveness becomes … 4  our COVID-19 Updates webpage by clicking here, What We Know About the Shuttered Venue Operators Grant. Receiving one or more 1099s constitutes being an independent contractor. 133. The guidance describes payroll costs using calendar year 2019 as the reference period for payroll costs used to calculate loan amounts. If you are interested in applying for a PPP loan and need assistance, please contact us by clicking here. Wait, What? 266,3 and H.R. Which set of instructions applies to me? Here's What to Do. How is the maximum First Draw PPP Loan amount calculated for S Corporations and C Corporations (up to $10 million)? Here are the general eligibility requirements: You have not previously received a PPP loan. Businesses that didn’t apply for or secure a loan during the U.S. Small Business Administration’s initial Paycheck Protection Program (PPP) round in 2020 still can apply for a First Draw Loan, even with the program reopening January 11, 2021, for eligible businesses to apply for a Second Draw Loan. Essentially, the business owner has eight weeks to spend the money on specific expenses in order to have it completely forgiven. Still Need to Apply for a First Draw PPP Loan? Small businesses may receive a loan of 2.5 times average monthly payroll. The math is as follows: Total Divided by 12 and multiplied by 2.5. As an independent contractor or sole proprietor, you would file a Schedule C with your 1040 tax return each year. 2895 Highway 190, Suite 213, Mandeville, LA 70471, © 2021 Ericksen Krentel CPAs and Consultants If any of these situations applied to you, and you ultimately received a PPP loan based on this information, it’s important you get professional advice immediately on how to move forward in the forgiveness stage and subsequent application. Related: PPP Forgivable Loans Will Be Unforgiving for Many. You Now Have an Extra Week to Return Your PPP Loan, PPP Forgivable Loans Will Be Unforgiving for Many, Game-Changing Solutions for Your Small-Business Questions: 2nd Edition, The Business Owner’s Guide to Financial Freedom — What Wall Street Isn’t Telling You, Coronavirus Stimulus Checks: How Delaying Paying Your Taxes Could Help You Get More, Nearly 330 Small-Business Leaders Call for $1.9 Trillion Stimulus Relief Package. I am an LLC owner. As stated above, this article applies to those of you filing a Schedule C as a sole proprietor/independent contractor, NOT if you are filing as an S-Corporation and taking a salary. EIDL has been an attractive option for entrepreneurs because they can also request a loan advance of … If you need assistance determining if you are eligible for a First Draw PPP loan and/or need help with completing your First Draw PPP loan application, please contact us by clicking here. Borrowers can receive a PPP loan … The Takeaway: Determine if the PPP works for your business, and do so by calculating the numbers based on your Schedule C for 2019. There’s still time to apply for a PPP loan from the new stimulus bill: Funding for first-time PPP loans is available through March 31, 2021, or until the new funds have run out. Our Franchise Advisors will guide you through the entire franchising process, for FREE! Mark J. Kohler is a CPA, Attorney, co-host of the Radio Show, Refresh Your Wealth, and author of the new book, The and Legal Playbook — Game-Changing Solutions for Your Small-Business Questions: 2nd Edition, and The Business Owner’s Guide to Financial Freedom — What Wall Street Isn’t Telling You. However, borrowers can use payroll costs from either calendar year 2019 or calendar year 2020 for their First Draw PPP Loan amount calculation. The IRS Can Ask You To Return Your Stimulus Check. But sole proprietors don’t have payroll. MoMo Productions | Getty Images. Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers. If you. Next, in order for a sole proprietor to properly apply for the PPP loan, it is absolutely required that they have their 2019 1040 Personal Tax Return filed and the accompanying Schedule C. Regrettably, in the early weeks of the stimulus plan, some banks anxious to help their customers would allow sole proprietors to apply with a simple 1099, a profit-and-loss statement or even a 2018 tax return. Entrepreneur Insider members enjoy exclusive access to business resources for just $5/mo: Entrepreneur Store scours the web for the newest software, gadgets & web services. Privacy Policy, Internal Audit/Internal Control/IT Audits, Reviews/Prep/Comps/Agreed-upon Procedures. Still Haven't Gotten Your Stimulus Check? Next, in order for a sole proprietor to properly apply for the PPP loan, it is absolutely required that they have their 2019 1040 Personal Tax Return filed and the accompanying Schedule C. If you have received a PPP loan, visit our Second Draw PPP loans page You must have 500 or fewer … As questions or concerns arise, we ask that you contact us so we can address them as quickly as possible to ensure we continue to meet your needs. Contributions to retirement accounts, whether a SEP, Solo 401k or IRA, are irrelevant. I mention this again, because it’s important for sole proprietors to not get confused by some of the rules that apply to corporations and not to them. Check eligibility before you apply. You have already used or will use the full amount of your first PPP loan before your second PPP loans … I am a self-employed farmer or rancher who reports my income on IRS Form 1040 Schedule F. What documentation must I provide in place of Schedule C and how should my maximum loan amount be determined (up to $10 million)? The restrictions on legal gaming businesses, nonprofits, and religious organization, however, do not apply. However, the loan-forgiveness procedure is still somewhat hazy for a sole proprietor. None of this happens, nor does the application even get underway, until the sole proprietor files their 2019 1040 Schedule C. Get in line as soon as you can if you are seeking the PPP loan, and have a consult with a professional while you wait. Once the business owner has their 2019 Schedule C in hand, the calculation is actually quite straight forward. Since you don’t have staff headcount, payroll, and benefits to calculate, your application process (for the loan … Here are some helpful answers to the most common questions we receive on this program, including answers on how to apply for a second PPP loan. Businesses that are debtors in a bankruptcy proceeding at the time the … How much money can I get from the PPP? Click here for full details.) On the face of it, the process seems quite simple on how the loan is forgiven. The latest stimulus bill adds 501(c)(6) nonprofits, local news media organizations and housing cooperatives to the list of businesses eligible to apply for a loan. (And yes, self-employed individuals, independent contractors, and sole proprietors can apply for PPP loans. To be eligible for a “second-draw” PPP loan a business can’t have more than 300 employees. I have filed or will file a Form 1040 Schedule C or Schedule F (or Form 1065) for 2020. Book a one-on-one session with a Franchise Advisor. You can use that information to apply for a PPP loan.” The loans are set up to provide 2.5 months of your average payroll costs as a loan. Then there is the historic, perpetual confusion shared by many of the self-employed regarding the difference between independent contractors and employees. If you’ve already received a PPP loan, you can still apply for a second one — called a second draw — as long as you meet the following criteria: You have fewer than 300 employees. Image credit: Sole proprietorships, contractors, and gig-workers are eligible for a PPP loan amount based on their net income. For businesses that went out of business prior to that … There is funding for “first draw” PPP loans and you can apply on terms similar to the original CARES Act. Should partners’ self- employment income be included on the business entity level PPP loan application or on separate PPP loan applications for each partner? I am a corporation or nonprofit and was in operation on February 15, 2020, but was not in operation between February 15, 2019, and June 30, 2019. What other documentation can an applicant provide for the purpose of substantiating payroll costs used to calculate the applied-for First Draw PPP Loan amount? Businesses that didn’t apply for or secure a loan during the U.S. Small Business Administration’s initial Paycheck Protection Program (PPP) round in 2020 still can apply for a First Draw Loan, even with the … If you had to close your business between February 15, 2020 and April 26, 2020, but have reopened, you may still qualify for PPP loans. Copyright © 2021 Entrepreneur Media, Inc. All rights reserved. What reference period should I use to compute my First Draw PPP Loan amount? You can apply through any SBA approved 7 (a) lender. Health-insurance premiums will not be considered in any part of the calculation. That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning. You do not have to demonstrate the 25% revenue loss for a first-time loan, and your business may qualify if it has more than 300 employees, provided it qualifies based on the previous CARES Act rules. … Being an independent contractor means you are a small-business owner or sole proprietor. Yes, if before the second loan is disbursed, your business will have used the full loan amount (including any increase) of your first PPP loan … Lendio is not a lender, and an application submitted through Lendio does not guarantee you will receive a PPP loan or be … There has been a tremendous amount of frustration by small business owners operating as sole proprietors and trying to obtain a Paycheck Protection Program (PPP) loan. Applications for Round 2 of PPP loans open the week of January 11, 2021. The deadline for loan applications is March 31, 2021, though this round of the PPP could end sooner if all the money has been distributed to businesses. How do partnerships apply for PPP loans, and how is the maximum First Draw PPP Loan amount calculated for partnerships (up to $10 million)? If you want to apply for a PPP loan, you start the process with your business's primary bank or financial institution. A business can get both EIDL and PPP, but it can’t use the funds for the same purpose. Related: You Now Have an Extra Week to Return Your PPP Loan. Again, paying others with a 1099 is not considered payroll. The money is to be spent on payroll (presumably compensation for the owner of the business), as well as some portion for rent, utilities and interest on fixed-debt obligations. I am self-employed and have no employees, how do I calculate my maximum First Draw PPP Loan amount? Please note the following: (These four items above only apply to corporations with W-2 Payroll). I am self-employed and have employees, how do I calculate my maximum First Draw PPP Loan amount (up to $10 million)? Regrettably, all of these factors converged simultaneously over the past month, making it very difficult for small-business owners to apply properly for the PPP — and many have simply given up trying to apply. If your business previously received a PPP loan during the initial phase in 2020 and meets certain eligibility requirements, click here to learn how you can apply for an additional PPP loan – which is referred to as Second Draw Loan. This situation has left many self-employed individuals wondering if it would make more sense for them to apply for a PPP loan … The updated guidance, which be found by clicking here, helps businesses calculate their payroll costs (and the relevant documentation that is required to support each set of calculations) to determine the maximum amount of a First Draw PPP loan. Here is some clarity for frustrated sole proprietors across America. Thanks to a second round of funding from Congress, the PPP is open to applications again. Self-employed individuals, including independent contractors, can apply … I am self-employed (or a partnership) and was in operation on February 15, 2020, but was not in operation between February 15, 2019, and June 30, 2019. I understand that the data I am submitting will be used to provide me with the above-described products and/or services and communications in connection therewith. Can you apply online for PPP loan from out of state if you are not in your home state can you still apply for the PPP loan online thru these fin techs or online forms are is there a rule that says you have to apply … In addition to pre-tax employee contributions for health insurance, what are the other pre-tax employee contributions for fringe benefits that may have been excluded from IRS Form 941 Taxable Medicare wages and tips that is part of employee gross pay? Let’s start by getting a few facts out on the table before proceeding. Businesses that don’t pass the 60% rule can still apply for partial forgiveness. Those seeking a second PPP loan must have: Previously received a PPP loan and plan to or already have used the full amount for qualifying expenses No more than 300 employees … 748,2 H.R. Is there a limit on the dollar amount of First Draw PPP Loans a corporate group can receive. If I have not received Forgiveness on my first PPP loan, can I apply for and receive a second PPP loan? No calculation on the PPP application will involve payroll, because you. Our team is ready to help create a customized approach for your organization to effectively, and correctly, apply for a PPP loan. If you have not received a PPP loan before, First Draw PPP Loans may be available to you. Bluevine — The Simple Dollar’s top pick for the best small business loans of 2020 — is … First-draw PPP loans only require that businesses be economically impacted, with employee caps at 500 for most small businesses. The business needs to apply and receive its first … Explore our giveaways, bundles, "Pay What You Want" deals & more. As a reminder, you can always monitor our COVID-19 Updates webpage by clicking here for the latest or monitoring our accounts on LinkedIn, Twitter or Facebook. …
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