The Coronavirus Aid Relief and Economic Security Act was signed into law on March 27, 2020. Included in this act is $350 billion designated to help small businesses keep employees on payroll amongst other needs while the nation fights the novel coronavirus pandemic.
One component of the CARES ACT is the Paycheck Protection Program. This program gives 100 percent federally guaranteed loans to small businesses to allow them to fulfill their payroll obligations. As long as they spend the money on approved expenses, including payroll, the loan may be completely forgiven. Understandably, as soon as the Small Business Administration released this information, as a small business owner, you may have been overjoyed with a sense of relief. Still, your next thought may have been. "Well, what are the requirements for my acceptance." As a small business, we at Fusion CPA, understand your disposition. So, our goal is to provide information that may help you gain an understanding of your financial options during these challenging times.
What Relief Can Real Estate Firms Get From The Paycheck Protection Program?
The Small Business Administration's paycheck protection program applies to real estate firms identified as small businesses. The loan supplements the expenses a small business would have during any eight-week time frame going from February 15, 2020, through June 30, 2020. The Small Business Administration has given strict guidelines for use of funds received and for the loan amount each small business can apply. Small businesses can apply for a loan amount that is the lesser of 2.5 times their average monthly payroll for the past year, or $10 million. When calculating the loan amount based on payroll expenses, it is capped at $100,000.
- Payroll expenses included in the (PPP) paycheck protection program SBA loans for real estate firms under the CARES ACT are:
- Cash tips
- Payment for leave
- Commission, wage, salary
- Retirement benefit payments
- State and local tax on the compensation of employees
- Separation or dismissal allowances
- Healthcare benefits payments
- Compensation for independent contractors, sole proprietors, net earnings for self-employment, etc.
Requirements For Loan Forgiveness: (PPP) Paycheck Protection Program SBA Loans For Real Estate Firms
One hundred percent loan forgiveness under the Paycheck Protection Program is possible if small business owners use 75 percent of the loan toward payroll costs and keeping the same level of employees on staff. The percentage of tax-free debt forgiveness a small business receives phases out as the number of employees they retain is lowered.
Your real estate firm may also receive 100 percent tax-free debt forgiveness, even if you reduce employment or wages between February 15, 2020, and April 26, 2020, as long as they rehire the laid-off employees and restore decreased wages by June 30, 2020.
(7) a Paycheck Protection Program Eligibility For Real Estate Firms
- Eligible uses for a (7) a PPP loan include:
- Interest on debts or obligations incurred before February 15, 2020
- Payroll costs
- Mortgage obligations and associated interest
- Continuing group healthcare benefits
What Is The Application Process For Paycheck Protection Program SBA Loans For Real Estate Firms?
As of April 3, your sole proprietorship or small business can begin the application process for paycheck protection program SBA loans. These loans are distributed by Small Business Association approved lenders.
The SBA does not administer the loans, and acceptance into the (7) a paycheck protection program may require a small business to fill out the PPP application provided by the SBA or fill out the form provided by the bank.
You may be required to sign a good faith certification indicating that you have been affected by the COVID–19 pandemic and that the funds you receive will be used to pay employees and cover existing debt obligations.
Paycheck Protection Program Updates
Fusion CPA is committed to helping small businesses thrive, even during difficult times. Our goal is to work with you to help you apply for (7) a paycheck protection program eligibility for your real estate firm.
Our experienced financial advisers offer to guide you through gathering the documentation needed to apply for the loan, helping you calculate how much you are eligible to apply for, and assisting you with connecting with a SB lender.
Once the eight weeks period is over, we may be able to help you analyze your eligibility for tax-free debt forgiveness to help you see how much of the borrowed funds will need to be repaid.
We have the resources to quickly respond to your needs. Contact us today at 404.955.7338. Our team is here for you.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.