There remain many ambiguous provisions in the laws that continue to be clarified by rule-making at the federal and state agencies. If you need to visit the SBA directly please click here: sba.gov. This may help you. Therefore, it will be more difficult for you to represent that the pandemic itself has had an adverse impact on your business. by Mary Girsch-Bock | hello@sba7a.loans, SBA Loan ComparisonSBA 7(a) Loan Fees, Rates, and TermsQualifying for an SBA 7(a) LoanSBA Loan Guides per State, Privacy PolicyTerms of UseAdvertiser Disclosure. In our next piece, we also cover two big tax options real estate brokers can use to provide further relief. 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. Source. 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. The maximum EBL loan term is 7 years. Please see the following statements C.A.R. Step 2: Calculate the average monthly gross income or net profit amount (divide the amount from Step 1 by 12). 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. 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). This second loan is called a second draw PPP loan.. Additionally, no collateral is required to obtain a loan, and there is no personal guarantee requirement. Whatever monies you do spend, remember to save those receipts! 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. Prior to May 4, the SBA had closed EIDL applications in order to work through the previous application backlog. A borrower will now be able to receive forgiveness if the borrower signs and submits to the lender a one-page certification form. 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A borrower is eligible for loan forgiveness for amounts the borrower spends during a period which begins on the date the lender makes the first disbursement of the PPP loan to the borrower and ends between 8 and 24 weeks after disbursement of the loan (the Covered Period). Additionally, there is no requirement that a borrower must pay themselves in equal weekly installments to obtain loan forgiveness. Step 3: Multiply the average monthly amount from Step 2 by 2.5. Multifamily Loans,Multifamily Today, 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. 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. Do I need to submit any additional supporting documentation with my loan forgiveness application? As described below, Paycheck Protection Program (PPP) loans are provided on very favorable terms, and they may be the best option for brokers if used to cover payroll and overhead costs. The grant amount will be based on the businesss annual revenue as documented in its most recent tax return. They are currently available to small businesses with fewer than 500 employees, including sole proprietors, independent contractors and other self-employed individuals. We have not reviewed all available products or offers. The CARES II Act created additional targeted EIDL advances for eligible entities located in low-income communities. Repayment plans are available up to 30 years as determined on a case-by-case basis. 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. The full amount of the loan can be up to $500,000, with interest rates of 3.75% for for-profit businesses. On June 17, 2020, the SBA posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the PPP Flexibility Act. 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. Eligible worker protection expenditures include expenditures for personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration. FAQs: Small Business Administration (SBA) Loans and Grants for Brokers, California Small Business COVID-19 Relief Grant Program. Cybersecurity The list of partners, organized by location and by language services, can be found. You cannot apply for PPP loans on the SBA website. If this amount is zero or less, you are not eligible for a PPP loan. Members electing to report PPP loan proceeds to EDD should do so over 8 weeks following when the loan was disbursed. Must be able to provide acceptable form of government-issued photo ID. Funds are usually available within 5 to 10 business days of approval. 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. Real estate brokers: How to calculate your PPP loan amount hb```f`` P @1V@NTYaR |JRn:Z 3Ap {/#OyCmc.\3YEYYK)pK/a\/X"R%-&iRmR#P%,.3/ :) u8NeHsd"Hv"3]APD3Jt @d(b .H"J6GGa"+@Z%"EC!Qqp(@pM*00^x*Z;hh20j 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. To verify payroll costs, you must submit the following documents along with your PPP Loan Forgiveness Application: 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. EIDL loans carry a low interest rate and a 30-year repayment term and can offer a lifeline to struggling small businesses. WebTake this free practice test to see how prepared you are for a real estate agent certifying exam. Before you agree to a loan, be sure that you are aware of and understand EIDL loan terms and requirements adequately. Great to put this video instruction and helping out. Are these grants still available? "Payroll costs" include net profit of independent contractors. I need help completing my PPP application. However, EDD suggests it is safer to do so. 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. 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. No additional forgiveness is provided for retirement or health insurance contributions for self-employed individuals, since such expenses may be paid out of their net self-employment income. What is an initial Paycheck Protection Program loan, and who qualifies? Paypal https://www.loanbuilder.com/ppp-loan-support, Kabbage https://www.kabbage.com/paycheck-protection-program-loans/, Divvy https://getdivvy.com/covid-19/sba-ppp-loans/assistance/, Credibly - 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, Lend IO / Paychex https://www.lendio.com/, Biz2Credit.com / Paychex (may be requiring 2 or more employees) - https://www.biz2credit.com/disaster-support/cares-act-loans-coronavirus, Union Bank - https://unionbank.avoka-transact.com/workspace/servlet/SmartForm.html?formCode=ppp-loan, Square Capital - https://squareup.com/us/en/l/sba-ppp-loans, Intuit Quickbooks - https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/, ReadyCapital - https://ppp.readycapital.com/. CMBS Loans, 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. Eligible rent costs include payments for rent obligations on real or personal property under a leasing agreement in force before February 15, 2020. Business finance Click below for a free, no obligation quote and to learn more about your loan options. Is SIC code 6531 eligible for EIDL loan? Remaining portions of the EIDL, for purposes other than those laid out as eligible for loan forgiveness under the PPP, will remain a non-forgivable loan. 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. You tax returns schedule C they will correlate with your profit and loss! 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. At least 60% percent of the PPP loan must be spent on payroll costs in order for the loan to be fully forgiven. Rupal Shah, Your email address will not be published. Consult with your accountant if you need assistance determining your gross receipts, and/or refer to SBAs FAQ document available here. I received an email for a loan processor asking for a couple of things from me. 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. You do not need to take any action related to this decision prior to filling out the loan forgiveness application. 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. No; however, emergency grant portion does not need to be repaid, $500,000; eligible borrowers can ask for "targeted" emergency grant of up to $15,000, Working capital purposes, including payment of fixed debts, payroll, and accounts payable, "Disaster-related purposes" to support the survival and/or reopening of the small business. Are they looking for my tax deductions? Option 1: Economic Injury Disaster Loans (EIDL) Businesses with 500 or fewer employees including sole proprietors, independent contractors and cooperatives For annual revenues greater than $1,000,000 up to $2,500,000, the available grant amount is $25,000. 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. The CARES Act II signed on December 27 creates a simplified loan forgiveness application process for loans under $150,000. The PPP also comes with usage restrictions. But you can qualify for those programs, even if you have no employees. Loans are automatically placed into deferment the first year of the loan, with repayment starting a year from when the initial loan was received. I'm a Paperless Agent subscriber and appreciate ALL the information and support you provide us with - THANK YOU! Its a time for family, friends and creating lasting memories. The advance face value is Like any loan, there are disadvantages to obtaining an EIDL loan, so its up to you to determine whether the advantages outweigh the disadvantages. 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. Real Estate Agents Near Me What is an SBA Express Bridge Loan, and who qualifies? 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. Applicants with multiple business entities, franchises, locations, etc. 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. When do I have to begin and end using PPP loan proceeds to qualify for forgiveness? 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. Cash compensation including salary, wages and tips is capped at $100,000 of annualized cash compensation per employee. Many or all of the products here are from our partners that compensate us. Both of these loan programs offer a number of advantages for real estate agents. Agents may qualify for their own PPP loans. 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. Using line 7 gross income will usually lead to a higher loan calculation, so it will be preferred for most sole proprietors. According to the SBA, applicants do not need to take any action at this time. 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. Borrowers with loans of $150,000 or greater will need to submit additional documentation to obtain forgiveness. EIDL Its also a time to reflect back on. 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. 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). SBA will loan borrowers up to $2 million for an initial PPP loan and up to $2 million for a second draw PPP loan. Applications for the program must be submitted through a Community Development Financial Institution (CDFI) that has partnered with the state of California to distribute the funds. 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. 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. Considerations for Approvals of PPP and EIDL SBA Loans by 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. Copyright 2018 - 2023 The Ascent. WebWe have been helping real estate agents and title companies with their foreign national clients for almost 20 years. 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. 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. I tried to apply for a PPP loan at my bank, but the bank refused to consider my application or rejected it. 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. Below are some resources and links that you can use to find a PPP lender. Supplier costs of perishable goods can be made before or during the life of the loan. C.A.R.s Guidance for Employers regarding the COVID-19 situation provides more information on the FFRCA sick leave tax credits.). 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. The risks associated with taking out a small business loan for real estate agents include the possibility of monthly payments increasing significantly at the end of the interest-only period when you are required to start paying both principal and interest. (office fees, advertising, cellphone, high speed internet, licensing fees, and real estate board fees?). 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. Businesses that were not in operation on or before February 15, 2020 are not eligible for second draw PPP loans. The following options are available to brokers: Are California Relief Grants available for brokers from the state of California? The list of partners, organized by location and by language services, can be found here. Press question mark to learn the rest of the keyboard shortcuts. None of the information on this site constitutes legal advice. In this case, we would recommend looking into the EIDL program instead. How will PPP loan forgiveness for owner replacement income work if I am a sole proprietor? If you need assistance completing the PPP application, C.A.R. Since the definition of payroll costs includes employee salaries, wages paid by an S Corporation will be considered payroll costs that can be covered by PPP loan proceeds. Real-estate brokers, are you looking for clarity about what help youre eligible for during the COVID-19 crisis? There are some exceptions, such as for a business with more than 500 employees that is considered small under SBA Size Standards. 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.
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