Small business loan for IC shoppers?
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I haven't seen it in any other threads, but I personally would not want to take out any loans. I do believe the amount of office space in your home that you use solely for MSing would be the only amount you could use for "rent" and I also think that would not apply if you were a homeowner and not a renter. As far as payroll goes, that would only apply to the amount of money you actually show a profit from, IMO. You might be able to use it to upgrade your home office (again, if it happens to be a space you use solely for MSing).
Others may view it differently.
Others may view it differently.
Some time ago, I thought about applying for a small business grant. I did not pursue that.
I love your idea! I hope that someone knows more about this and will post more (hint, hint)
I love your idea! I hope that someone knows more about this and will post more (hint, hint)
Nature does not hurry, yet everything is accomplished. - Lao-Tzu
Be very careful. You seem to be referring to the Payroll Protection Program (PPP), which is different from the Economic Injury Disaster Loan (EIDL) Emergency Advance of up to $10k. The guidelines are rather strict and detailed for both. The last thing you want happening is proceeding with either of these options and then end up paying it back because you didn't follow the guidelines to the T. Also, keep in mind the PPP loans will be processed with the assistance of banks, while the EIDL is going to be handled differently. For the PPP loans specifically, they will scrutinize you like a typical business loan application, so keep that in mind; if your financials aren't there to justify a bank to accept you for a PPP loan, a bank has the right to deny you for the PPP loan (to both protect you and if they feel that you aren't qualified for the loan), though there is some conflicting things in what the SBA states vs. what a bank is willing to comply with, last I heard. This was relayed to me in casual conversation with my sister, who is a commercial banker at a regional bank.
Edited 1 time(s). Last edit at 04/10/2020 03:46AM by Tarantado.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 1 time(s). Last edit at 04/10/2020 03:46AM by Tarantado.
Many banks are restricting the loans to "current business customers". I bank at Wells Fargo, so I called my banker last Friday. She said that the system had glitches, that I should call back Monday and check with her.
Wells Fargo reached their max loan amount on Sunday, and quit accepting applications.
I actually wouldn't have a problem repaying a loan --- after all, it IS a loan.
Wells Fargo reached their max loan amount on Sunday, and quit accepting applications.
I actually wouldn't have a problem repaying a loan --- after all, it IS a loan.
@ceasesmith wrote:
Many banks are restricting the loans to "current business customers". I bank at Wells Fargo, so I called my banker last Friday. She said that the system had glitches, that I should call back Monday and check with her.
Wells Fargo reached their max loan amount on Sunday, and quit accepting applications.
I actually wouldn't have a problem repaying a loan --- after all, it IS a loan.
It's a loan, but a forgivable loan with strings attached. Usually, the only other way to have a loan forgiven is through bankruptcy. These loans as a result of the stimulus is to makeup for business's economic hit from the COVID19 quarantine and its effects with the extremely attractive forgivable stipulation, as long as you follow guidelines (payroll, maintaining employees, pay rent, etc.).
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Also, something to check out, I have heard that if you are eligible only for either unemployment or a PPP loan, but not both, as the PPP loan will very likely turn into a grant for self employed. I could have misunderstood but a closer look is definitely warranted if you are thinking about applying.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
Since I wouldn't have "payroll" per se, I figured I wouldn't qualify for the forgiving part.
Payroll is paying yourself. So let's say your last tax return showed you making $1000 a month. You could get a $2500 loan, and use that loan to pay yourself $1000 a month. That would qualify you for loan forgiveness but disqualify you for UI, since you are getting paid.
What you CAN do is pay yourself for 10 weeks then file unemployment.
What you CAN do is pay yourself for 10 weeks then file unemployment.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
The article I read said if you pay taxes on less than $50k a year you are likely better off filing UI
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
@bgriffin wrote:
Also, something to check out, I have heard that if you are eligible only for either unemployment or a PPP loan, but not both, as the PPP loan will very likely turn into a grant for self employed. I could have misunderstood but a closer look is definitely warranted if you are thinking about applying.
Somewhat agree. This likely doesn't apply to the majority on the forum, but theoretically, if your self-employment for your business is structured under an S Corp, you are technically an "employee" for your business. So as long as you're paying your share of taxes for state unemployment, you may be able to claim both unemployment AND take advantage of the emergency relief grant and the PPP loan, given you financials are qualified by the bank.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
@Tarantado wrote:
Somewhat agree. This likely doesn't apply to the majority on the forum, but theoretically, if your self-employment for your business is structured under an S Corp, you are technically an "employee" for your business. So as long as you're paying your share of taxes for state unemployment, you may be able to claim both unemployment AND take advantage of the emergency relief grant and the PPP loan, given you financials are qualified by the bank.
No, the PPP is for payroll. If you use it for something else it becomes a loan and is not forgiven. If you pay yourself, then you have to deduct then you are no longer eligible for UI.
Now, what one might could do is get the loan, pay yourself weekly just enough that you still get $5 in unemployment, that would trigger the $600 extra AND still turn your PPP into a grant
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
@bgriffin wrote:
@Tarantado wrote:
Somewhat agree. This likely doesn't apply to the majority on the forum, but theoretically, if your self-employment for your business is structured under an S Corp, you are technically an "employee" for your business. So as long as you're paying your share of taxes for state unemployment, you may be able to claim both unemployment AND take advantage of the emergency relief grant and the PPP loan, given you financials are qualified by the bank.
No, the PPP is for payroll. If you use it for something else it becomes a loan and is not forgiven. If you pay yourself, then you have to deduct then you are no longer eligible for UI.
Now, what one might could do is get the loan, pay yourself weekly just enough that you still get $5 in unemployment, that would trigger the $600 extra AND still turn your PPP into a grant
Sorry to keep arguing, but no. The scope of the PPP spans to MORE than just payroll (i.e. leases, business mortgage interest, etc.). Additionally, the payroll stipulation is keeping employees on payroll stipulates keeping all employees on payroll OR rehiring them at a later date after furloughing (temporarily laying them or yourself off). But that's just skimming the surface, since you're mostly right on it MOSTLY having to cover payroll for you to qualify on the surface level.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 2 time(s). Last edit at 04/10/2020 05:23AM by Tarantado.
I think we are talking about two different things. I'm not talking about GETTING the loan, I'm talking about turning it into a grant, which requires you to use it for payroll.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
Actually only 25% of it can be used for non payroll period. Here's a pretty good overview.
[www.paulhastings.com]
[www.paulhastings.com]
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
@bgriffin wrote:
I think we are talking about two different things. I'm not talking about GETTING the loan, I'm talking about turning it into a grant, which requires you to use it for payroll.
We aren't. Using the loan for mortgage interest, leases, etc., which are other business expenses beyond just payroll is forgivable....
@bgriffin wrote:
Actually only 25% of it can be used for non payroll period. Here's a pretty good overview.
[www.paulhastings.com]
So we both agree that the PPP loan can be forgivable for expenses beyond just payroll then?
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 1 time(s). Last edit at 04/10/2020 05:30AM by Tarantado.
@Tarantado wrote:
So we both agree that the PPP loan can be forgivable for expenses beyond just payroll then?
I would be interested in hearing about the mystery shopper who pays rent or utilities strictly for their business or has prior SBA loans. Mayyyyyybe you could get away with a portion of your cell phone bill and interest only on a business credit card. What you can't do is go pay off your Lowe's card with it. So, for the spirit of this discussion, you pretty much have to use it to pay yourself. Also you have to pay yourself within 8 weeks, which would indeed cancel out UI.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
Even if this were possible, do you feel it would be ethical to take advantage of it? Someone who earns their income from shopping could file for unemployment. This loan is meant to keep businesses from shutting down and employees from losing their jobs, right?
I had the same thought - taking the loan and paying myself would make me ineligible for unemployment benefits. With my taxable income level, I'm better off taking the unemployment benefits. By my rough calculations, I would need to have an prior reported profit of about $36,000, along with other elligible monthly costs of around $1,000, to just break even compared to enhanced unemployment benefits. Without the $1,000 in costs, I would need to make in the $40,000s. So while this may make sense for a profitable MSC owner or higher-paid MSC employee, it doesn't do much good for me.
You have to have a multi person LLC or an S corporation. Sole proprietors or single person LLCs do not have payroll.
Edited 1 time(s). Last edit at 04/14/2020 02:46AM by roxy1.
Edited 1 time(s). Last edit at 04/14/2020 02:46AM by roxy1.
@roxy1 wrote:
You have to have a multi person LLC or an S corporation. Sole proprietors or single person LLCs do not have payroll.
That's 100% incorrect...........
@ wrote:
Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
Source: [www.sba.com]@ wrote:
For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
In short, if you are genuinely are looking into the PPP loan program, literally contact your local bank, as the SBA is utilizes 3rd party lenders (i.e. Bank of America, Wells Fargo, Chase, etc. etc.) to process the loan, while the SBA is who is providing the loan.
In short, since this site is targeted towards IC's, the Net Profit shown on your Schedule C (Line 31) and/or Schedule 1 (Line 8) divided by 12 to calculate your monthly 'Payroll Cost,' multiplied by 2.5. That is what's considered your "salary," as defined by the SBA.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 2 time(s). Last edit at 04/14/2020 03:00AM by Tarantado.
As an update and reading more into it, I decided to apply for the SBA’s PPP loan. I heard that there’s a backlog of hundreds of thousands for it, but it doesn’t hurt to get myself in the queue.
Long story short, SBA has a WEIRD way on defining a sole proprietor’s / IC’s “salary,” which is basically the net income listed on our Schedule C Line 31. Because of that, I applied for it and if it’s forgivable, GREAT! If not? Well, it’s a 1% loan I’ll just pay back in full.
Edited 1 time(s). Last edit at 04/14/2020 04:34AM by Tarantado.
Long story short, SBA has a WEIRD way on defining a sole proprietor’s / IC’s “salary,” which is basically the net income listed on our Schedule C Line 31. Because of that, I applied for it and if it’s forgivable, GREAT! If not? Well, it’s a 1% loan I’ll just pay back in full.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 1 time(s). Last edit at 04/14/2020 04:34AM by Tarantado.
If that is how the SBA defines payroll for the loan that may be very helpful for the self-employed.
For this particular loan it is.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
Yeah, it’s criteria defined by the SBA as recent as 4/10 when they started taking applications for sole proprietors and IC’s. My sister, who works for one for the banks processing the PPP loans agrees with me that lots of the terms and details of the loan don’t make sense, such as defining an IC’s salary and especially getting it forgiven too, which I think leaves lots of room for either fraud or lots of these loans WON’T be forgiven because of how wild, conflicting and loose the definitions are. But, it is only a 1% interest loan, so low risk for me.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
I found this article helpful for determining whether unemployment or a PPP loan is a better option for a self-employed individual: [poole.ncsu.edu]
@NinS wrote:
I found this article helpful for determining whether unemployment or a PPP loan is a better option for a self-employed individual: [poole.ncsu.edu]
The simple way to figure it out is for the average shopper:
1. Unemployment: $600/week for 4 months, or $10,200 for the 17 weeks.
or, you're subjected to a stupid long backlog and when the money bucket for PPP loans run out, it's out (unless the fed's release more money in a bill addendum and/or a new bill)...
2. PPP loan: your NET INCOME listed on your 2019 Schedule C Line 31 dollar amount / 12 * 2.5. So here's the quick math: $10,200 / 2.5 = $4,080. Unless your NET INCOME is $4,080 per month or more, choose unemployment all the way.
From the formula, it is HIGHLY likely the large majority of shoppers on this forum would be MUCH better off applying for unemployment. I personally would if I could, but I'm majority W-2.
Shopping the Greater Denver Area, Colorado Springs and in-between in Colorado. 33 year old male and willing to travel!
Edited 1 time(s). Last edit at 04/14/2020 05:24PM by Tarantado.
That coincides with the article I read that says if you PAY TAXES on less than $50k a year then it's better to file unemployment. Note, there is a significant difference between "make" and "pay taxes." My taxable income is less than half of my cash flow.
There are reasons that a body stays in motion
At the moment only demons come to mind
At the moment only demons come to mind
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