All right, welcome back everyone to the channel
I have Jeff as a special guest you might have seen him last week where he went and covered the PPP loan for
businesses and employers
However, there was a lot of questions on sole proprietors independent contractors
Which a lot of real estate agents that follow this channel. You guys were probably having questions about that
so he was kind enough to jump back on and
Answer some questions around how the loan works for you which that loan rolls out
It starts Friday right the applications
That's what we're hearing right now. That's was the plans now as everything has gone on this whole process
It may not come through at that same time, but we'll we'll hope for that
so kind of let's dive into that a little bit and
I'll let you kind of just take it away. Like how how's that loan amount determined if you're just paying yourself and
anyway, I'll let you kind of keep that off here a
lot of this information
Jason is dependent upon they're based upon what we've experienced with regular
Paycheck protection program loan that has been ruled out
Other businesses and so we're going to make some assumptions here as to how that's going to apply to their ships and independent contractors
Where typically you don't pay any wages to anyone else or to yourself
And so but they'll likely be looking for here is to base this loan upon your self-employment income
now to some of you that may be a
Term that you're very familiar with as you know on your individual tax returns
You pay both an income tax and you pay your self-employment tax
Which is the equivalent of Social Security tax bike a Medicare, which is typically associated with patients
So in this case what we anticipate they will do is look to say well, what is your average monthly?
self-employment income
Rather than what is your average monthly payroll cost
That's where we anticipate this loan being based off and they're two and a half times that average monthly self-employment income
Will be the loan amount. Now remember they camp this overall loan based upon compensation of
$100,000 for the year and so for those individuals that are making over a hundred thousand dollars
you'll only account or account the
$100,000 for the entire year and divide that by 12 to come up your average
self-employment income for the year, so that could be
roughly a
$20,000 loan then right? That's right. Okay, it's gonna be two and a half times eight thousand three hundred thirty three dollars
okay, and so is this one forgivable just like
The writ the PPP loan for employers as well
Yes, this this is part of the PPP loan program. It's just a little different for those who are self-employed
And then you kind of contract them. So
let's talk about what are some of them maybe the documentation that
Viewers are gonna need to get ready in order to have ready for this Friday submission to their banks
Well, it's interesting
the the actual loan application itself is only I'm only going to ask for just a little bit of
Information and then it's dependent upon the bank
Through which you're saying in order to get this loan ask you for a lot of the details to support that
average monthly self-employment income and so
to support what your average monthly self-employment income is you'd likely look at your
2019
self-employment income as it's reflected on your
2019 tax returns and so for some of you who have got those returns done I
Congratulate you on that
For those who don't you may want to look to get those done pretty quickly here or at least have the information available
That you would use to get those done
so the the type of information that the banks will likely look at is to say show us your Schedule C V out of your
individual tax return
And on that Schedule C II that's where your business income and expenses are reported
So if you are working as an independent contractor or as a self-employed individual you'll be receiving
Money from
Whomever you're serving on that report that income as income on Schedule C and then also reflect all of your business related
Expenses and at the bottom section of that Schedule C. It will show your net income from that business activity
And is that net income from that business activity?
That is also subject to the self-employment tax and would be considered self-employment income
So Schedule C of your individual tax return will likely have the information that the banks will want to see
To support the amount of your average monthly self-employment income that will show up on that application
Then once you want you get this information
I know one thing that we've been talking about is where like what bank do I submit this to?
Like what's the best way like to go find where you're supposed to be submitting this information to apply for this long?
Well the under this cares Act that made all these loans available
They have allowed all banks the opportunity to register with the SBA in order to provide these loans
So any bank you go to has the authority to apply with the SBA and obtain these loans for you
but most of these banks are
Required to confirm one that you're a legitimate business that you're in business and more in business prior to February
2020 and
The way they do that is they like to look at the information that they already have on file for you
So your best bet is to go to a bank with which you've had a relationship
And if you've had a business loan with those banks
That is the preferable place to go to for those who don't have a business loan
Then you're gonna want to look to see who you have been Banking with
And go to them because they will have some information on file about you and use that information
to confirm that
you're in business and
To look at some of the reasonableness of the information that you're gonna provide them
So the banks that you had an association with and dealing with those are the first ones to go to now
I remember somebody on the previous video was asking if you already have a business loan
on through wanting through your bank
can this PPP loan be used to go and pay down that loan or is it just for payroll like the
the other
Video that we talked about. Yeah, this is the the purpose of this loan is to
Keep people employed and to keep your rents paid and utilities paid association associated with your business
in this situation we're talking about
Independent contractors and sole proprietorships. So really the only people that are on
That you would be responsible for making payroll too is going to be yourself. Now, you're not actually paying yourself payroll
It's just a matter of generating revenues in order to pay yourself so that you can continue to pay your own bills
so it's those uses of those funds are going to be
Limited to the payment of yourself for the services that you are rendering any rent
Associated with your business and any utilities associated with your business and if you don't use it for those purposes
Then it will limit the amount of the loan that can be forgiven. So
Any anything that I'm missing that I'm not asking that you've had clients ask that?
we should be bringing up for I and guys if you do have any other questions just drop them down below this video and we'll
Do our best to get back and respond to those comments and help you guys out if you're unsure on one of these topics
So but yeah any anything else that we're missing before we jump off here
You know the key thing is is
that a portion of these loans can be pretty given if the
funds are used appropriately over the next eight weeks after obtaining that loan and
It's in that forgiveness process and when you apply for forgiveness alone
when I
Believe that there will be a great deal of scrutiny
As to the information that you have provided in order to obtain the loan and how you've actually got the funds
the loans are hopefully going to be
Obtained and submitted very quickly
And so the funds can be dispersed and the money get back out into the economy
and
So the banks are going to do a whole lot of due diligence
in order to issue these loans that they will be required to do quite a bit more when
We go back to apply for forgiveness on these loans
So these loans we're talking about here today are simply those four
sole proprietorships who may not have payroll being paid to any other people except for the owners of the business as a sole right and
Perhaps any partners in partnerships that the partnerships themselves are not paying any payroll
but the partnerships are generating South pointment income and
You're ganna be impatient that would typically show up in your individual tax return support the request for that loan
another thing to keep in mind
You may have some challenges getting these loans forgiven if at the time you've gone out and applied for unemployment
Unemployment typically isn't available to a business owner
But in certain circumstances here under the cares Act the unemployment insurance has been made available to owners to businesses
So you can't get both of forgiveness of the loan and also claim unemployment
And so these loans that we're talking about here today applied to those individuals
Drivers lyft drivers the gig economy
Keep in mind it's not the amount that you're being
paid for performing those services
it's the amount of
Your income after you've incurred expenses to perform those services and that's what's reflected on that Schedule C of your tax
So real quick on everything you were saying, you know
You're saying how there's gonna be a lot more due diligence
With the forgiveness of the loan because I know on that last video
there was a lot of people saying this can really literally be
Forgiven a hundred percent and and yes, like you're saying if it's used on the right things
But if it's not it's the it's a 1 percent interest rate right on that money
That's that's what we're seeing it for charging a 1% interest rate on that
The Forsman that is not forgiven will be required to be paid back within two years
They will determine whether or not the loan funds have been used
appropriately by looking to see how you spend out within the 8 week period
Following the receipt of those small funds with the idea that you would spend at least 75% of those funds on
wages or in this case on
Paying yourself as business owner
Awesome. Well, Jeff. Thank you again
I'm sure everyone appreciates it you jump it on here and explain all these different pieces because it can be a bit confusing
All this stuff that's changing so much happening so fast
So once again, we all thank you collectively for jumping on here and explain all this for us
well
it's a pleasure to visit with you on this as we've experienced that these loans have rolled out there have been changes and
Interpretations and understandings as there this can apply almost on a minute-by-minute
Basis and so stay tuned for what's gonna change on that. You'll hear a lot floating around out there
as to how these actually work and it says because there's a lot of confusion on these things but
Good luck and going forward and keeping yourself taken care of during these times
Well, thank you so much and rope and also guys if you want if you have questions drop them down below
I know I said that before but if you're still kind of like I wish we would have covered this topic
Drop down below and we'll do our best to respond to those
So anyway guys, thank you so much for watching and we will talk to you all later