Dallas, TX · Member since 2014 · 31 posts · 19 votes
Hi everyone,
I’ve had the hardest time figuring out if 1099 independent contractors working as real estate agents qualify to get money from the government under the disaster sba forgivable loans. It seems that we do, but does anyone have any clear direction?
Financial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
6y
@Mike L. I agree with your assessment of the PPP loan amount. Just make sure to have a good grasp on the loan forgiveness portion of the bill as well. You need to have specific expenses in the 8 weeks immediately after receiving the loan in order to qualify for the loan forgiveness. I know a restaurant owner, for example, that could qualify for the loan right now, but will not have enough expenses to qualify for loan forgiveness so they are waiting to apply until things are more back to normal.
Seems like 1099 independent contractors will just fill out the same application as the small businesses. And under payroll, will just average their 2019 monthly x2.5, excluding anything over $100k annualized. So the max monthly would be $8,333.33= max application $20,833.32
Financial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
6y
@Mike L. I agree with your assessment of the PPP loan amount. Just make sure to have a good grasp on the loan forgiveness portion of the bill as well. You need to have specific expenses in the 8 weeks immediately after receiving the loan in order to qualify for the loan forgiveness. I know a restaurant owner, for example, that could qualify for the loan right now, but will not have enough expenses to qualify for loan forgiveness so they are waiting to apply until things are more back to normal.
Financial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
6y
@Mike L. I should also mention that there is the $10,000 EIDL Program. This, however, has turned into a huge debacle and the SBA is only planning on $1,000 per employee for the grant. You can do the EIDL program with the grant and then the PPP. EIDL funds just reduce the amount you receive from the PPP.
I'm still having trouble figuring this out. I am a solo Realtor without any employees. Would I be able to qualify? I'm only interested for the loan forgiveness.
Rental Property Investor · Tulsa, OK · Member since 2012 · 291 posts · 102 votes
6y
We’ve applied for the SBA loans For several businesses and have been approved. To me it’s a no brainer. Free money if used, then a low interest loan if unused. At min, take that low interest loan if you have money left after the forgiveness period and apply it to a credit card balance or something. I haven’t seen if there are prepayment penalties but I’ve gotta believe the government won’t be forcing you into prepayment penalty
I’m confused now — isn’t the forgiveness going to be based on paying myself at the same rate I used to come up with the monthly average amount? The idea of allowing independent contractors to apply on their own is to prevent them from going on unemployment, as well. I agree that the bookkeeping needed to show this internal transfer is going to be debated, but the 75% rule for “payroll costs” would still apply here — namely, me being my own payroll as a contractor. Thoughts?
@Frank Rossi It's very important to have your expenses will documented, you will also have to request the to be forgiven and the banker will evaluate your support and confirm if it meets the expenditure and support requirements.
Rental Property Investor · Tulsa, OK · Member since 2012 · 291 posts · 102 votes
6y
@Kevin DeVargas we received two PPP loans and both have minimum interest prepayment penalties. It's not much, but it's definitely in our documentation. I know there's a lot of room for interpretation from bank to bank so perhaps our lender is interpreting it differently than others.
Accountant · Atlanta · Member since 2020 · 71 posts · 38 votes
6y
@Callum K. Thanks for the update!! I read there would by no prepayment penalties on the government site But they have updated the site multiple times, it feels like a moving target. Thank again, appreciate your input.
It appears that independent contractors are safe-harbored based on their 2019 Schedule C Line 31 amount for forgiveness purposes. Take 8/52nds of that amount, and that’s the amount related to payroll costs such a person will be permitted to have forgiven. All other acceptable expenses will be required to be substantiated for forgiveness purposes.
@Kevin DeVargas we received two PPP loans and both have minimum interest prepayment penalties. It's not much, but it's definitely in our documentation. I know there's a lot of room for interpretation from bank to bank so perhaps our lender is interpreting it differently than others.
Callum thanks for the feedback. Do you have employees in the businesses that received funding or are they different businesses of yourself as self-employed?
Rental Property Investor · Tulsa, OK · Member since 2012 · 291 posts · 102 votes
6y
@Kevin DeVargas both businesses have employees. One business has been directly affected by the pandemic and this has been a helpful bailout, while the other business has actually done a lot better in the past month so the loan is basically a bonus. Fortunately, we were funded early and have stayed on top of it and didn't make the mistake of going through a large bank. I've helped a couple contractors of mine submit their files, but I feel they waited too long and now they are stuck in the grey area of uncertainty until congress gets things flowing again. Personally, I think you have to be foolish to have not jumped on this opportunity. It's either free money, or its an insanely low interest loan with minimal recourse.
Hi, I started working in January 2020 but I haven't sold any property yet. Does this apply on me?
Hi, I'm a new realtor & started working in January 2020, but I haven't sold any home yet. Does this apply on me? If yes, How can I apply? Is there any application that I can fill out?
Hi, I'm a new realtor & started working in January 2020, but I haven't sold any home yet. Does this apply on me? If yes, How can I apply? Is there any application that I can fill out?
Flipper/Rehabber · Colorado Springs, CO · Member since 2015 · 36 posts · 25 votes
6y
@Rana Hansen no if you have no income yet you can't get ppp. Realtor Yes if you are 1099. I processed serveral realtor apps yesterday but they had 2019 1099 income. 1099 is 2019 monthly avgerage x2.5. Then 8/52 of last year for payroll portion of forgivness. 20,833 is the most you can apply for...
@Miles McClure Hi Miles, I saw your post where you state that you processed several Realtor applications yesterday, 2019 1099 Contractors. I'm guessing you also work for a bank? I applied through Kabbage, and they keep requesting a W-3, which doesn't apply to me. I have also heard that you can't apply with any other bank now, because they aren't taking anymore applications? Maybe you could confirm my questions? I think I'm going to miss out again, on this second wave? Thanks again in advance. -Marc
Flipper/Rehabber · Colorado Springs, CO · Member since 2015 · 36 posts · 25 votes
6y
@Marc Thurston it really depends on the bank. SBA today quit accepting from Bots like Kabbage. They will accept API's but that takes time to shift and get that up. I have heard all along bad things about Kabbage not getting things processed. They are a middle man trying to get a cut not a SBA lender. And they have had issues from what I have heard. I assume their program wasn't written for all application types but I am not sure. Anyways bots were cutoff because it was crashing the system too much. Knowing what I do when the mass uploads happen a few make it I think while many get stuck in the website crash. I don't know what that looks like to the lender as we choose to not go the automated route for this issue. I know as soon as I submit as long as it is done correct if we have approval from SBA. We have had customers apply with us after applying somewhere else you just can't take more than one loan and the system should kick the other lender out b/c the SSN or EIN has already applied. Some of the big banks I have heard are no longer taking apps but I do not know. I would stay away from the big banks and work with your community bank as we aren't trying to process as much thru automation which works much better given the issues and guidance. They should also be easier to work within the guidelines like your W3 issue. Community banks funded over 60% of the first round money as well. I will say yesterday was awful. I know guys that had 15 people submitting for 13 hours and got 18 apps approved. I was able to get a lot more than that thru but most didn't fare as well. We are currently about 55 billion committed from what I have heard out of 310 billion so a little over 1/6th of the way thru funding. I would reach out now and make sure you have all your paperwork in order as that will hold things up. 2019 1099 up to 100k max or 20,833 if it's just you and you made 100k. Forgiveness is 8/52 of line 31 schedule C for 2019. Best of Luck if I can help anymore let me know.
Cedarhurst, NY · Member since 2016 · 1 post · 0 votes
6y
Hi,
The new PPP terms say “When you applied you certified that“current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
For real estate agents that don’t have rent, but basically just pay themselves is a salary, would they qualify for the above qualification?
CPA · Charlotte, NC · Member since 2016 · 37 posts · 16 votes
6y
The IRS recently released a statement that expenses funded by forgiven loans cannot be written off. Keep this in mind when budgeting and setting aside additional funds for taxes.
Question about the 25% left of the loan (after 75% is used to pay myself):
As an agent, I don't have rent or a mortgage. I read that utilities can include phone (assuming cell phone as well) and transportation (car mileage?) I'm wondering if my monthly advertisement cost qualifies as a utility?
Additionally, since I did not make a seperate bank account for business, I linked my personal checking account where I do business as well. Do I need to transfer funds to another checking account to 'show' that I paid myself? I just don't want any issues with the loan forgiveness.
@Omar Moses To my understanding, you can only use 75% of the loan amount to pay yourself. Since I do not have an office that I rent, I am left with extra funds that I'll like to have a use for.