in this video I'm gonna be providing a lot of answers to questions I've been
receiving about the Paycheck protection program and these are questions like can
I apply if my business is not affected where can I apply my banks not accepting
applications how much of the loan amount will be forgiven but before I jump into
answering those questions a little bit about myself my name is Navi Maraj I am
a CPA that specializes in helping real estate agents realtors and brokers and
normally I'm busy helping clients trying to save them thousands of dollars in
taxes but this video is specific to PPP and some of you have watched my other
video which is more of a high-level overview of the program and I asked
sorry I answer quite a few questions I received when the program was initially
announced close to a month ago you know before I get into the Q&A just
a quick shout out to all the positive feedback I received about that other
video and all the emails I received and all the feedback in general has been
great and I really appreciate it but let's jump into the questions here I'm
gonna start out with a basic question of just what is PPP in case you're watching
this video and you haven't seen my other video if you want to see the other one
just go on my channel and take a look if you need a link to it it's just navimarajcpa.com
and you'll find it there so a little list less candid video I
might be reading from time to time but you know let's start out with what what
is PPP right so I mentioned it stands for the Paycheck protection program it's
a program that was put in place by the cares Act and at the end of the day the
government is trying to stimulate the economy and you know you can apply for a
loan based on your payroll costs and before you think about that too much yes
you as a Realtor have payroll cost regardless of how you're taxed you'll
apply through a bank you will receive loan documents you'll execute those
lines loan documents and we'll receive the funds once those funds
have been received you then have eight weeks to deploy that capital after that
eight week period is up or probably a couple of weeks prior to that you will
then have to apply again with your bank that you receive the PPP loan from and
apply for forgiveness so that all of the monies that you receive are hopefully
forgiven the cares Act explicitly states that you will not have cancellation of
debt income that's kind of a accounting term but what I mean by that is you know
you will not get taxed on the amount that the bank forgives and there's a
little nuance there that the IRS is sort of kind of pushing back on but for now
as it's written in the cares Act you're not supposed to receive cancellation of
debt income let's jump into some of the other questions here so do I qualify as
a realtor and you know I'm using the blanket statement realtor here but I
mean you know agent or broker or what have you
yes I mean it the answer is simple but yes you qualify I have clients that are
reaching out to me or asking the questions like oh I thought for some
reason I didn't qualify but yes you definitely do qualify and you should
apply do I qualify even if my business has not been affected by kovat and sales
are the same as they were prior to coronavirus or some of my clients their
sales are up and the answer is yes you can apply so even though you've gone
through this period where you had a slight dip but things are overall okay
the government's not looking to see how your sales have been affected they're
just basing how much you can apply for on your 2019 numbers not your 2020
numbers is there still funding yes there is still funding the initial first round
of funding was depleted then they opened up a second round of funding which
actually allocates more monies to the smaller banks and local credit unions
and they actually have some of them plenty of money to give away and they
actually don't have clients to give that money away to I know that contradicts
what you've heard but as of the date of this recording the program is
still funded and I think you could you know apply at a local bank and still get
the loan approved and receive the loan proceeds how much can I apply for now
this one I'm gonna have to deviate a little bit and sort of answer the
question from the perspective of how your tax so the the general question is
you know how much can you apply for well you can you know apply for this if
you're an S corporation if you're taxed as a sole proprietor or if you for
whatever reason don't deduct any expenses and all you do is you know
claim your 1099 income and you don't deduct any expenses let me let me
dissect that a little bit so most of you out there will be taxed as a sole
proprietorship meaning you may have even created an LLC but you are taxed as a
sole proprietor and so you fill out and I actually have the tax form here
Schedule C when you're file your taxes right so this is Schedule C it's part of
your individual tax return says the Schedule C on the top left-hand corner
and if you look at line 31 on here it says net profit or loss if you've got a
profit there you qualify you would basically take line 31 divide that
number by 12 and multiply that number by 2 and a half and that would be the loan
amount that you could apply for now there's some of you out there that have
formed a professional or association or a professional corporation and so your
tax return probably looks more like this you're taxed as an S corporation and so
you'll dig out this tax return and you'll see that it says 11 20s on the
top left-hand corner and you'd look at line 7 compensation of officers okay
now the way you calculate the amount you would apply for as an S corporation is
not what's written on line 7 of your S corp tax return
but if you have a positive number there chances are you have payroll expense and
your bank will request the documents that are required of you to apply for
PPP as an S corporation now if you're an S corporation and line seven is a zero
well that means you're not paying yourself a reasonable salary and
therefore and you should be the IRS says that you need to be and therefore you're
not gonna qualify so if you're a Schedule C and line 31 is negative
because you operated at a loss you don't qualify if you are an S corporation look
to line seven make sure there's a positive number there then go apply and
your bank is gonna ask you for what documents they want to see now I
mentioned a moment ago you know technically you could be well so all of
your independent contractors as a realtor right but some people I'm
finding out are or do the following meaning they actually just take their
1099 and put it in TurboTax or some other software and don't take any
deductions and so they just pay taxes on that gross amount that's on the 1099 if
that's you then you can apply for this as well and all the bank is really going
to ask for is your 1099 amount and so they will take that amount your gross
commissions typically divide it by 12 multiplied by two and a half and that's
the amount you will be approved for now is the loan really forgivable yes the
goal is to have the loan a hundred percent forgiven but you know most of
you will qualify to have 75% forgiven pretty easily and and I say that because
you know if you look into the math and you just think about it basically what's
happening is the government saying hey we'll give you a two and a half months
of payroll costs right and then we'll give you those monies and then you have
eight weeks which is pretty much two months to deploy that capital well if
you think about it the calculations based on two one
half months but you only have two months to use the fun so I there'll be a chunk
of the money that some folks won't be able to have forgiven but you know don't
get worried I mean if that's your concern that shouldn't be your concern
because the amount that's not forgiven is still gonna receive extremely
favorable terms meaning you'll get a 1% interest rate you won't even have to
make that first payment until six months later so it's a six month payment
deferral now interest is accruing that 1% interest is accruing from the day you
receive the loan proceeds but you don't have to make your first payment for
another six months and you'll have a two year repayment term so I can't think of
another loan at one percent with a six month deferral and a two year repayment
term you know let's say you don't like those rates well then you know when you
apply for forgiveness the amount that's not forgiven just give that money back
to the bank yeah you'll still have paid you know the 1% interest but you'll just
give the money back and you won't have you know a portion of the loan that has
not been forgiven okay here's an important one I'm trying to apply online
at my big bank and can't why well the big banks want you to apply online they
don't want you going to their financial centers and you know have a bunch of
people in their Lobby applying for these loans so they're
making you apply online there are two problems with this one is you know there
are literally thousands of people in front of you in that virtual line of
applying through your you know through the internet and to another problem is
if you go through a big bank is not only are you so far back in line that that
Bank might run out of funds before they can even approve you number two is if
you commingled funds and I know that's a negative word but a lot of you do that
for some reason Realtors that run their business out of their personal account I
mean that's okay sometimes but the problem is if you bank with a larger
Bank they don't know that you have a business
and they they're not going to give you the option to even apply online so so
you're not going to be able to even find access to apply for a PPP loan if you
bank with a larger bank and you don't have a legit business account okay so
where should you apply then well you should apply at a local bank or a local
credit union local banks as part of the phase two of the funding received a big
chunk of the amount allocated for PPP so you should try to find a local credit
union or a local bank so you have like your big banks like JPMorgan Chase and
Wells Fargo and Bank of America then you have your regional banks which are still
quite large maybe like a PNC or over what have you I'm talking lower than
that like small level that only has you know a handful of branches in your local
market or your local credit union you know I live in South Florida and there
is actually a local credit union that just started taking apps about two weeks
ago and know firsthand that a business applied and within five days they did
the application receives a phone call from the bank looked at the supporting
documentation executed the loan documents and have funding within five
business days so don't believe the hype that of the funds are gone or I can't
apply or the bank's out of money you know that's not true also regarding you
know where to apply you cannot apply directly through the SBA for the PPP you
would normally have applied directly to the SBA for the Eid el program the
emergency injury disaster alone but for the PPP it is facilitated through a bank
can I apply at multiple banks yes you know when you're applying there's
language that says hey you know make sure you don't have an application in or
approved for a loan elsewhere but if you go to a large bank and you go through
the whole process and you hit submit either once you hit submit or a couple
days after you'll actually get an email from that
says hey you know thanks for your application we're trying to process
these as fast as possible but there's a good chance that we're not going to get
to yours so we encourage you to apply elsewhere I mean that's just proof that
you can apply elsewhere the prot that what they don't want you doing is
executing loan documents at more than one bank if the bank approves you and
they told you loan docs already sign on those docs
and if another bank that you applied for it calls you then say sorry I got
funding elsewhere where can I find more information you know this is gonna sound
sort of bias but if you go to my website it's NaviMarajCPA.com
I created a coronavirus you know kovat page that talks about the PPP and the e
IDL real quick about a IDL you know they close that portal it's only available
now to agricultural companies so you can't apply for a IDL anymore but on my
website lists all that I keep it up to date there's over 25 frequently asked
questions just about you know PPP and these other loan programs and you could
read the answers there and there's more detail than I'm getting into in this
video so you should be able to sort of follow along alongside your tax
documents and apply on your own if you need my help on that same page there's a
link to my online calendar set ten minutes of time with me if you want to
chat about some things or if you have some questions I'm happy to help you out
alternatively you can go to the SBA's website not to apply but read some Q&A
there and try to get your answer to your question but on my site you know again I
only help Realtors and agents and brokers and so all of my Q&A is from the
perspective of a realtor and it's written in layman's terms that I think
you'd be able to understand so you know I'll try to create another video here
about specifically about the loan forgiveness forgiveness the reason why I
haven't talked about that too much is because well you know it's still up in
the air there's a lot of rules about S corporations that are kind of out there
but for you sole proprietors or you folks that have just put and entered
into 1099 so Mount they're still kind of sorting
through how all that's gonna work but I'll create another video on how to
maximize the loan forgiveness amount based on how your tax and how you filled
out your P P P alone application alright that's about it if you found this video
helpful I appreciate it if you would just like
it or share it with your fellow realtor colleagues and if you need to reach out
to me there's tons of different ways you can get a hold of me just go to
navimarajcpa.com and all my contact information is there with that said I
will see you in the next video thanks