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How To Get Ppp Loan

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What If I Just Started As An Independent Contractor Or Am Self

How Did a Company Called âFâK The System, LLCâ? Get a PPP Loan?

The exception appears to be for sole proprietors, independent contractors, and self-employed individuals. In a supplemental letter on 4/14/20, the treasury department stated:Regardless of whether you have filed a 2019 tax return with the IRS, you must provide the 2019 Form 1040 Schedule C with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019 IRS Form 1099-MISC detailing non-employee compensation received , invoice, bank statement, or book of record that establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.

Finally, although the Act makes businesses in operation on February 15, 2020 eligible for PPP loans, the Administrator, in consultation with the Secretary, has determined that self-employed individuals will need to rely on their 2019 Form 1040 Schedule C, which provides verifiable documentation on expenses between January 1, 2019 and December 31, 2019. For individuals with income from self-employment from 2019 for which they have filed or will file a 2019 Form 1040 Schedule C, expenses incurred between January 1, 2020 and February 14, 2020 may not be considered because of the lack of verifiable documentation on expenses in this period.

Be sure to familiarize yourself with the treasury departments guidance here.

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Can I Use Ppp To Refinance My Eidl Loan

Some borrowers have received both a PPP loan and an Economic Injury Disaster Loan . There are some very specific but limited circumstances where you can refinance an EIDL loan with PPP. Pay careful attention to the dates here!

  • You must use PPP to refinance your EIDL if you received EIDL loan funds from January 31, 2020 through April 3, 2020 and used the EIDL loan funds to pay payroll costs.
  • You may use PPP to refinance EIDL loan funds received from January 31, 2020 through April 3, 2020 and you used the EIDL loan for purposes other than payroll costs.
  • You cannot use PPP to refinance an EIDL loan if you received EIDL loan funds before January 31, 2020 or after April 3, 2020. This is the majority of borrowers.

What If I Have Not Filed My 2020 Tax Return For My Business

The SBA does not state that you must file your 2020 tax return before you apply. The good news is that if you want to qualify based on your gross income , youll only need to complete lines 1-7 of your Schedule C to get that number used to calculate your loan amount. For many independent contractors, self-employed individuals and gig workers, that should be pretty simple. Youll find Schedule C instructions here.

Heres what that first section of Schedule C looks like:

Alternatively you may use information from your 2019 Schedule C to qualify instead.

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Are Amounts Attributable To The Business Operation Of A Tenant Or Sub

No. In an Interim Final Rule on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs originally posted on August 24, 2020, the SBA has stated that the amount of loan forgiveness requested for nonpayroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, for home-based businesses, household expenses. The IFR provides four examples:

  • If a borrower rents a building for $10,000/month and subleases a portion of the building for $2,500/month, only $7,500 of the rent is an eligible non-payroll expense.
  • If a borrower has a mortgage on a building and leases 25% of the fair market value of the building to other businesses, only 75% of the mortgage expense is eligible.
  • If a borrower operates out of a shared rental, it must prorate rent and utilities as it did on its 2019 tax filings .
  • If a borrower works out of their home, only the share of covered expenses that were deductible on their 2019 tax filings are eligible for forgiveness .
  • Lendio Ppp Online Lenders

    How to Get A Forgivable PPP Loan for Self Employed or Independent ...

    They have an online lending market with a network of over 300 SBA-approved financial institutions and online lenders to help SMEs secure funding. Lendio promoted an $8 billion PPP loan through funding for the CARES Act in 2020 and participated in the second round as well. You only had to submit your PPP loan applications on the Lendio website. Once the 2021 program was officially launched, an application submitted to the PPP lender could get you access to PPP funding easily in a hassle-free process.

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    Is Being Able To Repay Your Mortgage With A Ppp Loan Worth Paying Lower Interest Rate

    Youll definitely pay a lower interest rate on a PPP loan compared to a conventional mortgage. But is it worth it to pay a lower interest rate on a PPP loan? Thats up to you to decide. There are a few things to keep in mind when deciding how to use your PPP loan. One is that youll probably need to pay a higher interest rate on a PPP loan compared to a conventional loan for a similar amount of mortgage debt. Second, youll need to carefully consider the impact of a lower interest rate on your monthly budget. In order to save for a home purchase, you may need to work extra hours or take on additional debt. A lower interest rate could mean you have less money left over each month to put towards your dream home.

    Showing A 25% Or Greater Reduction In Revenue

    A 25% or greater reduction can be shown in one of two ways:

    • Comparing your annual gross revenue as reported on your tax return in 2020 to 2019
    • Comparing your gross revenue in any quarter in 2020 with your revenue in the same quarter of 2019

    For example, if a business wants to use the second quarter of 2019 where they recorded $20,000 in gross revenue, they are eligible if they recorded a gross revenue of $15,000 or less in Q2 2020.

    Further reading:How to Calculate a 25% Reduction in Revenue for PPP 2

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    What Is Square Capitals Relationship To Ppp

    You may apply for PPP funding through Square Capital, but Square Capital, like all PPP lenders, plays no role in determining PPP requirements. All PPP requirements and guidelines are determined by the SBA. You are welcome to apply for PPP funds through Square Capital or any other approved PPP lender. Should you apply for and be approved for a PPP from Square Capital, Square Capital LLC will both issue and service your loan.

    PPP funding through Square Capital has no relation to Square Capitals

    What If I Work From Home Or Sublease Part Of My Space Can I Still Count That Rent For Forgiveness

    How To Do the PPP Loan Step by Step (Part 1)

    No, the amount of loan forgiveness requested for nonpayroll costs may not include any amount attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, for home-based businesses, household expenses. The examples below illustrate this rule.

    Example 1: A borrower rents an office building for $10,000 per month and sub-leases out a portion of the space to other businesses for $2,500 per month. Only $7,500 per month is eligible for loan forgiveness.

    Example 2: A borrower has a mortgage on an office building it operates out of, and it leases out a portion of the space to other businesses. The portion of mortgage interest that is eligible for loan forgiveness is limited to the percent share of the fair market value of the space that is not leased out to other businesses. As an illustration, if the leased space represents 25% of the fair market value of the office building, then the borrower may only claim forgiveness on 75% of the mortgage interest.

    Example 3: A borrower shares a rented space with another business. When determining the amount that is eligible for loan forgiveness, the borrower must prorate rent and utility payments in the same manner as on the borrowers 2019 tax filings, or if a new business, the borrowers expected 2020 tax filings.

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    If Your Business Is An Llc

    How to calculate your loan amount will depend on how your LLC files its taxes. The SBA states that LLCs should follow the instructions that apply to their tax filing status in the reference period used to calculate payroll costs i.e., whether the LLC filed as a sole proprietor, a partnership, or a corporation in the reference period.

    Economic Aid To Hard Small Business Nonprofits And Venues Act

    The government launched the Economic Aid to Hard Small Business, Nonprofits, and Venues act on December 27, 2020, under which the second round to PPP, which was in existence from march to august 2020. Good accounting and bookkeeping services are mandatory to keep proper track of your finances and present them as your eligibility benchmark. If you are a sole proprietor, you can look up the best bookkeeping services as per your business.

    This new bill strives for two things:

    • to provide financial support to the small businesses that could not make it for the PPP loan in the first round
    • to allow other eligible companies a second chance to raise a PPP loan.

    The second program commenced on March 31, 2020.

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    How Do I Apply For A First Or Second Ppp Loan

    Businesses can submit applications for PPP loans to SBA-approved private lenders, credit unions, and fintech companies. Businesses should start the process by talking to any lender they currently work with first to see if they are taking part in the PPP program. If you do not have an existing lending relationship, you may want to apply with a fintech company. The SBA also has a tool called Lender Match that can help businesses find an approved PPP lender.

    For the latest wave of PPP loans that were approved in December 2020, applications opened for select community-based lenders on January 11, 2021, and subsequently opened for more lenders in the following weeks. Applications for the latest PPP loans are open until May 31, 2021, or until all funding has been exhausted.

    Loan Amount Calculation With Employees

    Info on the PPP Loan Program NEW GUIDANCE!

    Start by calculating your gross income minus any payroll costs as reported on a 2019 or 2020 Schedule C. This can be found by taking the amount reported on line 7 and subtracting the amounts in lines 14, 19, and 26. Put this amount in box A.

    In box B, divide this value by 12. If the value is greater than $8,333.33, you must use $8,333.33.

    In box C, you must report your average payroll expenses. You can review how to calculate the average monthly payroll expense in Part 2 of our form 2483 overview above.

    Finally, add boxes B and C together. Multiply this amount by 2.5 to find your PPP loan amount. PPP loan amounts are capped at $2 million. Put the lesser of your calculated loan amount and $2 million dollars in your Loan Request Amount box.

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    How Will The Ppp Funds Distribute In 2022

    Under the second PPP round, SBA received $248 billion to support first and second PPP loan borrowers.

    The funds will break down as:

    • $20 Billion will be reserved for Economic Injury Disaster Loan for low-income communities businesses.
    • $15 Billion was reserved for Shutter Venue operator Grants for movie theaters, Cultural Institutions, and live venues which didnt have other options but to shut their business.
    • $12 Billion is reserved for low-income businesses and minority communities.

    Do I Qualify for the New PPP Loan?

    First and foremost, you need to show your proper financial record to benefit from PPP. You can qualify for a new PPP if you lie under any of the below-mentioned categories:

    • You are eligible if you did not receive a PPP loan during the first funding round
    • First-round PPP beneficiaries who meet specific criteria and require the second loan.
    • First-round PPP beneficiaries who paid back the original loan and need extra financial support.

    Businesses who apply for the PPP loans are required to be in existence since, at the very least, February 15, 2020.

    Things To Keep In Mind

    Its essential to understand that the loan will only be forgiven if the borrower follows the guidelines outlined in the CARES Act. The Paycheck Protection Flexibility Act passed in June updated some of the original guidelines. One of those stipulations is that your company maintains the same number of employees during the covered period as it did during the previous year. In basic terms: You cannot qualify for loan forgiveness if you lay off your employees.

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    How To Get A Ppp Loan If I Start A Business In 2022

    You could benefit from the paycheck Protection programs only if your business was in operation by February 15, 2020. To benefit from this incredible program, you need accounting and bookkeeping services to display your financial records correctly.

    PPP enables an incentive for small business owners to retain their employees on the payroll. PPP was introduced in March 2020, allowing loans to small businesses and sole contractors to cover their payroll costs for up to eight weeks.

    This program allotted $349 billion to help small businesses, forasmuch as high application rates, so another $320 billion were implanted. The brightest side of this loan is that its partly or completely forgivable. Therefore, you do not have to return the amount as long as you follow specific rules.

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    Work With A Local Bank If Possible

    How To Apply for the FREE PPP Loan – Paycheck Protection Program

    Not everybody banks with a local community bank, but if you do, you will find you are more likely to be able to work with a real person and get more information and better service throughout the process. The larger banks have long lists of businesses and organizations that have applied, and many have stopped taking new applications. You may need to move your business bank accounts to the local community bank to get into their queue, but it may be the difference between getting and not getting PPP money.

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    Whos Eligible To Apply For New Ppp Loans

    The new round of PPP loans will be available to three categories of businesses:

  • Qualified small businesses that did not receive a PPP loan during the first round of funding
  • Previous PPP loan recipients who need a second loan and meet certain criteria
  • Previous PPP loan recipients who returned all or part of their original loan and want to apply for additional funding
  • Every business that applies for a PPP loan needs to have been in operation since at least February 15, 2020 to be eligible.

    First-time PPP borrowers from the following groups are eligible to apply:

    • Small businesses or nonprofit organizations with 500 or fewer employees that qualify for other SBA 7 loans.
    • Small businesses, 501 veterans organizations, tribal businesses, and small agricultural cooperatives that meet the SBAs size standards.
    • Sole proprietors, independent contractors, and self-employed people.
    • Food services or hospitality businesses that have fewer than 300 employees per physical location.

    Previous PPP loan recipients who meet the following criteria are eligible to apply:

    • Have fewer than 300 employees.
    • Have already used or will use the full amount of their first PPP loan.
    • Can demonstrate a 25% reduction in gross revenue from any quarter in 2020 compared to the same quarter in 2019.

    Previous PPP loan recipients who returned all or part of their loan are also eligible to apply .

    What Are The Loan Terms

    The interest rate for all PPP loans is set at 1%. PPP loans that were issued before June 5, 2020, mature in two years. Loans issued after June 5, 2020, have a maturity of five years. The maximum loan size for a first-time PPP loan is $10 million, and the maximum loan size for a second-draw loan is $2 million. No personal guarantee or collateral is required. Also, both the government and lenders involved with PPP are not allowed to charge small businesses any fees for processing these loans.

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    Upload Or Confirm Documents

    On the Upload Your Documents page, you must upload all required documents or confirm that everything previously uploaded is correct and add any documents youre missing to ensure a completed PPP application.

    If you dont already have the following attachments added to your application, please upload them:

    • Drivers License for all owners with 20%+ share in the business: A color copy of the front and back of a valid Drivers License for each owner. Make sure to double-check that the Drivers License is not expired.
    • Acceptable Payroll Documents :
    • For businesses applying for a PPP Loan:
    • 941 Quarterly Tax Filings
    • 944 Annual Tax Filings
    • Payroll Register for the previous 12 months
    • 12 months most recent bank statements
  • For 1099 Independent Contractors or self-employed individuals applying for a PPP loan:
  • IRS 1040 Schedule C
  • 1099s
  • Income and expense reports for 2019
  • For all applicants
  • Ask For Help If You Need It

    The Positive Effects of the PPP Loan for the Industry

    Community development financial institutions, known as CDFIs, and small-business development centers are available to help business owners who have questions about applying for loans. Vermont Slauson Economic Development Corp., a CDFI in South Los Angeles, has walked business owners through the process, as well as ensuring that their accounting systems and new business models are resilient, said Delores A. Brown, a financial consultant there.

    The business model that sustained them prior to the pandemic may not be the business model that is going to create any sustainability moving forward, she said.

    Vermont Slauson is also referring clients to partner organizations that are accepting PPP loan applications, she said.

    Pacific Coast Regional has also referred loan applicants to partner lenders and provided business owners with information on other available financial programs, Isaac said.

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