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PPP Loan Self-Employed - SBA Loan Break Down! (Round 2) - YouTube
Channel: The Kwak Brothers
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the Paycheck protection program is back
and in this video I'm gonna go and
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unpack and update the latest information
and news about the Paycheck protection
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program as well as talking about the
patriot protection program that applies
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to self-employed individuals and
independent contractors,
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Hey everyone this is Sam Kwak here one of the Kwak Brothers coming to you again with
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another update on the SBA program
specifically the Paycheck protection
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program now before we begin the video be
sure to subscribe to our channel if you
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want more updates about the SBA programs
as well as the Paycheck protection
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program okay so just few weeks ago the
Paycheck protection program did indeed
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run out of money but a couple of days
ago the government took action to put
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additional funding through the Paycheck
protection program with the additional
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funding that was added to the Paycheck
protection program there's also a new
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guideline that was established by the
SBA that addresses situations like
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partnerships and starting today you can
once again apply for the Paycheck
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protection program if you have not
already by now several hours have passed
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so you don't want to miss on the
opportunity if you're eligible to go and
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apply for the Paycheck protection
program also you may want to ask fast
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because all applications are due June
30th 2020 the path may seem far away but
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remember the Paycheck protection program
again is limited by the funding as well
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as the time limit on the application now
in this video I want to specifically
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dress the individuals that are
self-employed independent contractors
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and also my landlords who I love you
guys I'll be dressing those three
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categories in this video specifically
how the Paycheck protection program will
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apply to you now the definition of
self-employed and independent contractor
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is if you file taxes and you add
Schedule C to your taxes you are
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considered self-employed or independent
contractor so you could be driving for
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uber or lyft or you may have a side gig
or side business maybe you freelance on
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the side and you get paid 1099 or you
self report the income then you would
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qualify to be self-employed or an
independent contractor now people are we
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get into the self-employed part for the
Paycheck protection program let's go and
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get a quick refresher on what the
Paycheck protection program is who
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qualifies what are the terms and and how
the loan can be forgivable I'm not going
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to spend a whole lot of time here so
let's do a lightning round and the quick
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facts about the Paycheck protection
program alright so who can apply all
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businesses and khlo茅 not-for-profit
veteran organization tribal
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is concerned sole proprietorships
self-employed individuals and
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independent contractors with 500 or
fewer employees can apply now there are
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businesses that can also apply that have
more than 500 poise but there are
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guidelines as to which industry that
applies to so what can these loans be
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used for well the MB must be used for
payroll calls including benefits
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interest on mortgage obligation in
current before February 15 2020 rent
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under lease agreements in force before
February 2015 and utilities for which
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services begin before February 15 2020
where can you apply well you can pretty
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much apply it at any local bank such as
a credit union a community bank or
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national chain that you often see in
your neighborhood what are the terms of
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paycheck protection program well quickly
the maximum amount that you can qualify
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for is 10 million dollars you can get a
loan deferment up to six months which
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means that you don't have to make a
single payments on the loan for up to
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six months the loan matures in two years
with an annual interest rate of one
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percent and no personal guarantee is
required however if you use these funds
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fraudulently and if you lie in your
application you could be subject to
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criminal charges now here's a part that
everyone is interested about which is
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the loan forgiveness yes the Paycheck
protection program is subject to loan
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forgiveness as long as you use it
properly within the guidelines that the
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SBA has set up for you guys so let me go
and break down how exactly you can get
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your loan forgiveness under the Paycheck
protection program when you apply for
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the loan forgiveness you do need several
documents as well as some written
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records as far as how you use the funds
with the Paycheck protection program you
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also have to use 75% of the entire loan
amount for payroll costs in order for
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you to be qualify for loan forgiveness
so if you don't have an intention on
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using the loan amount to pay your
employees or do any payroll this program
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may not be the best fit for you but as
long as you can show that you've used
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the Paycheck protection program alone to
pay your employees and 75% of the loan
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amount has gone to payroll your loan may
be subject to forgiveness under the
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Paycheck protection program guidelines
you must also keep your employees hired
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and there are bonuses for rehiring
employees so make sure you don't take
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the money pay your employees and then
fire them right away
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that's debt this doesn't work okay now
additionally there are some suggestions
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that I've received from my accountant as
well as my legal professionals about how
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to properly treat the loan amount when
you receive them from your lender the
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suggestion is that you should have as
much record as
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but when using the Paycheck protection
program such as retaining receipts
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invoices documents that show that you
paid your payroll as well as your rent
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so keep as much document and record as
possible additionally my accountant has
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suggested that you should have a
separate bank account for the Paycheck
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protection loan amount mainly because
you don't want any commingling and you
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want to ensure a clear transaction
history that shows that the money from
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the Paycheck protection program has gone
to use to pay the payroll rent utilities
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and interest on a mortgage payment now
what is not forgivable is the fact that
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you just smash the like button on this
video for the YouTube algorithm so if
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you have not already going smash the
like button and turn the like button to
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blue again if you want more information
about the Paycheck protection program
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I'll go and leave the link down below
where it can go read more about it but
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next we're gonna get to the
self-employed individuals for those who
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are independent contractors I want to
talk about how the Paycheck protection
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program will work for you all right here
we are the Paycheck protection program
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for self-employed individuals as well as
independent contractors let's quickly
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break it down how does applies to you
and what can do to get the money from
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the Paycheck protection program so if
you are self-employed or independent
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contractor and you don't have any
employees well the first thing that the
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banks and lenders are gonna look at is
your 2019 tax return and they'll most
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likely look at what's called your
Schedule C now a Schedule C is simply
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additional documents and your tax
filings that show that you have
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self-employed income in your 2019 tax
return if your Schedule C is $0 or
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you've not found a tax that has a
Schedule C unfortunately you will not
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qualify for the Paycheck protection
program now with your schedule see on
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your 2019 tax return your lender is
gonna go and look at line 31 this is due
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to the fact that the income cap is
$100,000 so if you make more than
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hundred thousand dollars when your
Schedule C well you just have to go with
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hundred thousand dollars now what you're
gonna do is you can go divide that
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number by 12 to get the average monthly
schedule seed in that income multiply
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that number by 2.5 and this is the
amount of the loan so for example let's
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say line 31 says you make hundred fifty
thousand dollars the loan amount is a
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hundred thousand dollars divided by
twelve times two point five which equals
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twenty thousand eight hundred thirty
three dollars so tanika's speaking
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that's the maximum amount that you can
get with the Paycheck protection program
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if you're self-employed or you're an
independent contractor now I want to go
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thank my friends at entrepreneurs
buko which they have been able to
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provide some amazing information about
the Paycheck protection program for
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self-employed individuals as well as
independent contractors so if you want
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to go read the information yourself I'll
go and leave that link down below under
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the video description now let's go talk
about how the loan forgiveness will work
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for self-employed individuals as well as
independent contractors according to the
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Paycheck protection program guidelines
eight weeks worth of 2019 Schedule C
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income is forgiven apparently
automatically this ultimately means that
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you don't have to show any documents
invoices or receipts to show that you've
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used the loan amount for the appropriate
things now going back to the hundred
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thousand dollar income example and your
schedules see the apparent automatic
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forgiveness amount will be fifteen
thousand three hundred eighty four
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dollars so out of the twenty thousand
eight hundred thirty three dollars
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fifteen thousand three hundred eighty
four dollars would be forgiven math is
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pretty simple it's hundred thousand
dollars divided by fifty two and then
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times again by eight weeks which shows
the fifteen thousand three hundred
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eighty four dollar amount additionally
during the eight weeks following the
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funding of the loan any business
expenses for utility including business
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vehicle gas red interest would be
forgiven up to the remaining Unforgiven
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amount of the loan so technically the
entire loan amount of twenty thousand
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eight hundred thirty-three dollars will
be forgiven if use for business expenses
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now that's pretty much for the
self-employed individuals but the new
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guideline also dresses the individuals
that have partnerships now if your
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business is a partnership and you file a
ten sixty five for your taxes both you
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and your partner's must apply for the
PPP loan so you alone cannot apply for
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it your entire collective group as a
partner's must apply for the Paycheck
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protection program together
it says the loan amount is based on the
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combined self-employed income of the
general active partners up to the
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maximum a hundred thousand dollars per
partner so for example so for example if
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there are three partners in your
business the maximum loan amount is
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three hundred thousand dollars divided
by twelve times two point five and that
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equals sixty two thousand five hundred
dollars for the total loan amount now
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it's not addressed that specifically
with the new guideline but it is assumed
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that the partnerships and the loan
forgiveness part will be the same thing
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as the proprietors and self-employed
individuals so the math is basically
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three hundred thousand dollars divided
by 52 times eight weeks which shows
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about forty six thousand $154 that is
subject to forgiveness again you can use
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expenses utilities rent interest on
mortgages that could also be added to
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the loan forgiveness aspect of the
partnership now the question remains
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what about landlords what if you own a
rental property and that's pretty much
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the income that you have on top of your
job or maybe you have other businesses
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but what happens to landlords now
because rental property income is not
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technically Schedule C it's actually for
maybe a 25 or Schedule E the SBA really
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hasn't created a guideline as far as how
form 88 25 or Schedule E will be treated
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but so far the guideline that we do have
is individuals that have Schedule C
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independent contractors may be you file
1120s which is an S corporation the SBA
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says that paycheck protection program is
for you but I have not found any
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information about individuals that owned
rental properties therefore we file a
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Form 88 24 Schedule E if you are in
landlord watching this I do suggest that
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you have a conversation with your
accountant or a tax professional as to
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which tax documents you file if it's for
maybe a 25 or a Schedule E I would
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definitely find and if you file a
Schedule C for some reason because you
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have an Airbnb hospitality business or
maybe you have a property management
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business then the guidelines of the
picture protection program would apply
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to you I'll continue to update you guys
as long as you subscribe to the channel
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and hit the bell notification icon so
that you get notified when a video comes
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out now for you landlords what might be
a better fit for you then the Paycheck
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protection program might be the economic
injury disaster loan which I like to
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call the idle loan an additional sixty
billion dollars of funding has been
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added to the idle program this week so
it is again open it hasn't ran out of
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money yet so definitely go and apply for
the economic injury disaster loan there
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is a part in the application where you
can go and put in how much of the rent
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that you've lost due to the corner virus
pandemic and this is the program where
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it gives you up to ten thousand dollars
of grant money upfront within three days
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of applying the grid is based on
employee count or subcontractor counsel
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if you have handyman subcontractors
plumbers you can add all those in as far
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as how much money can potentially get
with the SBA idle grant so that's pretty
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much it for the update guys if you have
any any questions about the Paycheck
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protection program or the economic
injury disaster loan go and leave it
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down below as always subscribe to our
channel and hit the bell notification I
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if you want to get notified on future
updates and videos and go and check out
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some of the other videos I created about
SBA programs and the economic stimulus
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programs that are out there on the table
as a proposal
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