April 23, 2020
For those tenants who have not received PPP loans, below are two important updates. Be sure to act today.
1. Local Bank offers PPP loans to new customers
Unity National Bank’s website indicates they are accepting PPP loan applications from new customers. See more here. Be sure to also follow up with the list of banks I provided yesterday. You can apply for a PPP loan with more than one institution provided you only accept one loan.
2. Guidance for Sole Proprietors and Independent Contractors
Some tenants responded that they believe they are not eligible for PPP loans because they operate as an unincorporated sole proprietor or independent contractor without any employees. If you fit this category, the SBA recently released guidance on how you can apply for a PPP loan with potential debt forgiveness. If you are a sole proprietor or independent contractor without employees, the maximum loan is $20,833, of which $15,384 can be forgiven based on your income and the an additional amount (up to 75% of the loan) can be forgiven for rent and other business expenses.
The loan will be based on your 2019 Schedule C tax form. If you have not completed your 2019 tax return, use this link to download the form and submit it with your application. To calculate the amount of your loan, start with the amount shown on line 31 of Schedule C. If line 31 is more than $100,000, use $100,000. Divide this number by 12 to get average monthly Schedule C net income. Now multiple that number by 2.5. This is the amount of your loan. For example, if line 31 is $125,000, the loan amount is: ($100,000 divided by 12) x 2.5 = $20,833.
To calculate the amount of potential loan forgiveness, use eight weeks’ worth of 2019 Schedule C income. For example, if a proprietor has the maximum $100,000 Schedule C income, the forgiveness portion would be 8/52 x $100,000 or $15,384. Business expenses such as utilities, rent and interest during the 8 weeks after funding of the loan can also be used to calculate the amount of forgiveness provided the Schedule C portion is 75% of the amount forgiven.
If you are a partnership, the partnership applies for the PPP loan and the loan is based on the combined income of the active partners up to a maximum of $100,000 per partner.
I hope this information is helpful to you.