SBA PPP and EIDL Small Business Loans (some money is forgivable)

[AsherO]

Any reason to rush and do it right away? in other words, is the funding limited?

My guess is the funds will get depleted, the only question is how soon.

[TBD]

My guess is the funds will get depleted, the only question is how soon.

Probably not, since it's maxed at $2M instead of the $10M 1st round, as well that you will need the 30% reduction in gross receipts.

[TBD]

It's earned income, but it's not an increase in earned income on the couple's return if the $28k is paid out of the husband's eventual earned income...

The husband is SE as so he is not eligible for ERC, the spouse if paid by W-2 her income will be taxable and eligible for the ERC which will trigger a $14k ERC credit, The credit itself is not taxable, However the $14K won't be a business expense
https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-special-issues-for-employers-faqs#special-issues-employers-income-and-deduction

Special Issues for Employers: Income and Deduction
85. Does the Employee Retention Credit reduce the expenses that an Eligible Employer could otherwise deduct on its federal income tax return?
Yes. Section 2301(e) of the CARES Act provides that rules similar to section 280C(a) of the Internal Revenue Code (the "Code") shall apply for purposes of applying the Employee Retention Credit. Section 280C(a) of the Code generally disallows a deduction for the portion of wages paid equal to the sum of certain credits determined for the taxable year. Accordingly, a similar deduction disallowance would apply under the Employee Retention Credit, such that an employer's aggregate deductions would be reduced by the amount of the credit as result of this disallowance rule. 

86. Does an Eligible Employer receiving an Employee Retention Credit for qualified wages need to include any portion of the credit in income?
No. An employer receiving a tax credit for qualified wages, including allocable qualified health plan expenses, does not include the credit in gross income for federal income tax purposes. Neither the portion of the credit that reduces the employer's applicable employment taxes, nor the refundable portion of the credit, is included in the employer's gross income.

[TBD]

Does this mean that under new law you can include amounts paid to independent contractors for PPP calculations?

https://www.sba.gov/sites/default/files/2021-01/PPP%20--%20IFR%20--%20Paycheck%20Protection%20Program%20as%20Amended%20by%20Economic%20Aid%20Act%20%281.6.2021%29-508.pdf

ii. you were in operation on February 15, 2020, and either had employees for whom
you paid salaries and payroll taxes or paid independent contractors, as reported on a
Form 1099-MISC or you were an eligible self-employed individual, independent
contractor, or sole proprietorship with no employees.

[

[ShimshonK]

Can anyone here summarize which programs are available specifically to Schedule C businesses?
I'd think many on this thread may fall in that category.
I understand there's 2nd draw PPP, and EIDL grants, but I wasn't clear on which of the other programs are relevant for self-employed.

[AsherO]

Probably not, since it's maxed at $2M instead of the $10M 1st round, as well that you will need the 30% reduction in gross receipts.

Restaurants and hospitality can draw 3.5x, companies still eligible for 1st draw with streamlined forgiveness under 150k, the reduction in gross receipts shouldn’t be an issue for many businesses considering how it can be any quarter YoY.

It’s about as much $$ as the second round, when vast majority of the bigger loans were in the 1st round.

[skv]

Does this mean that under new law you can include amounts paid to independent contractors for PPP calculations?

https://www.sba.gov/sites/default/files/2021-01/PPP%20--%20IFR%20--%20Paycheck%20Protection%20Program%20as%20Amended%20by%20Economic%20Aid%20Act%20%281.6.2021%29-508.pdf

ii. you were in operation on February 15, 2020, and either had employees for whom
you paid salaries and payroll taxes or paid independent contractors, as reported on a
Form 1099-MISC or you were an eligible self-employed individual, independent
contractor, or sole proprietorship with no employees.

[

pg 49 of same link:

Do independent contractors count as employees for purposes of PPP loan calculations?

No, independent contractors have the ability to apply for a PPP loan on their own so they
do not count for purposes of a borrower’s PPP loan calculation.

[AsherO]

pg 49 of same link:

Do independent contractors count as employees for purposes of PPP loan calculations?

No, independent contractors have the ability to apply for a PPP loan on their own so they
do not count for purposes of a borrower’s PPP loan calculation.

How do you then interpret the verbiage bolder by @TBD?

[cgr]

so if a self employed person received the government money and never spent it and it is still sitting in his original  bank account he is considered as having used it and is eligible for a second loan and for forgiveness?

Schedule Cs, yes. There's no difference between the sole prop entity and the person, so there's no way for a sole prop to prove that he spent it since there's no payroll or draws.

[cgr]

My guess is the funds will get depleted, the only question is how soon.

For some reason banks don't seem to think so, although the interest I've seen over the past few days has been well above my expectations- it looks like many qualify even with the new rules in place.

Something to keep in mind though- Ds will be in power in less than 2 weeks and they'll be quick to replenish any program that runs out of funds.

[cgr]

Does this mean that under new law you can include amounts paid to independent contractors for PPP calculations?

https://www.sba.gov/sites/default/files/2021-01/PPP%20--%20IFR%20--%20Paycheck%20Protection%20Program%20as%20Amended%20by%20Economic%20Aid%20Act%20%281.6.2021%29-508.pdf

ii. you were in operation on February 15, 2020, and either had employees for whom
you paid salaries and payroll taxes or paid independent contractors, as reported on a
Form 1099-MISC or you were an eligible self-employed individual, independent
contractor, or sole proprietorship with no employees.

[

They're explaining to you what it means to be "in operation", not that these are eligible for PPP.

[cgr]

Can anyone here summarize which programs are available specifically to Schedule C businesses?
I'd think many on this thread may fall in that category.
I understand there's 2nd draw PPP, and EIDL grants, but I wasn't clear on which of the other programs are relevant for self-employed.

PPP
EIDL
FFCRA

ERC is only for employees, and is not available to the self-employed individual.

[cgr]

I just got my PPP loan (round 1) forgiven!

I'm sure I am representing a lot of people here when I say that no amount of 'thank you's or no amount of likes could suffice to express my appreciation to @cgr for the unbelievable work she put in to help so many people here. And thank you DDF for providing a forum for such assistance.

Glad to hear it!

You're welcome! It's a great zechus to be able to help out, both here on DDF and across the community.

I'd like to take this opportunity to once again urge everyone to check their 2019 return for a Schedule C. In the last few days I've seen way too many people who didn't apply in the first round because they had no idea they had a Schedule C... and it's not only the ones who have a few thousand on it- I'm seeing plenty who will be eligible for the full $20k. Do yourself a favor and take 3 minutes out of your day to check your tax return, and urge your friends and family to do the same.

[TBD]

They're explaining to you what it means to be "in operation", not that these are eligible for PPP.

ii. you were in operation on February 15, 2020, and either had employees for whom
you paid salaries and payroll taxes or paid independent contractors,



I dont think to be in operation you have to pay any employees or pay yourself, if you bought something for $100 and sold it for $100 or $90 you were in operation even you didn't had any profit and didn't pay any payroll.

It clearly states that #1 you were in operation #2 AND you paid employees



I agree that they probably won't count just it seems there as  a drafting error

[gozalim]

Glad to hear it!

You're welcome! It's a great zechus to be able to help out, both here on DDF and across the community.

I'd like to take this opportunity to once again urge everyone to check their 2019 return for a Schedule C. In the last few days I've seen way too many people who didn't apply in the first round because they had no idea they had a Schedule C... and it's not only the ones who have a few thousand on it- I'm seeing plenty who will be eligible for the full $20k. Do yourself a favor and take 3 minutes out of your day to check your tax return, and urge your friends and family to do the same.

what's the smallest sched c/1099 worth dealing with?

[cgr]

ii. you were in operation on February 15, 2020, and either had employees for whom
you paid salaries and payroll taxes or paid independent contractors,



I dont think to be in operation you have to pay any employees or pay yourself, if you bought something for $100 and sold it for $100 or $90 you were in operation even you didn't had any profit and didn't pay any payroll.

It clearly states that #1 you were in operation #2 AND you paid employees



I agree that they probably won't count just it seems there as  a drafting error

In operation= when the business starts incurring expenses or has income.

I don't think that's a drafting error since it's all over the place and has been for a while... no one I've asked so far was able to discern what that last part means- it does not mean that you're eligible for 1099 employees- that much is clear.
Let's wait for an IFR on the IFR

[Hjay]

Will do.

Is this for a 1099/Schedule C individual?

Yes. Thank you.

[cgr]

what's the smallest sched c/1099 worth dealing with?

The SBA doesn't approve loans under $1k, so the minimum eligible Schedule C would be $4,800.

[cgr]

Yes. Thank you.

And does your 1099/Schedule C reflect that housing allowance?

[TBD]

In operation= when the business starts incurring expenses or has income.

So a sale you argue won't be considered in operation? I don't think so