PPP w/o Schedule C?

[itjesus]

First post here so go easy on me..

Has anyone else received PPP funding after SOLELY sending in 1099 MISC? (So no Schedule C)

As for my situation, I’m an independent contractor w/ 0 employees & filed for PPP as soon as it was available. (Recording Engineer/Producer)

Originally there was little guidance and appeared that the loan amount (mine was $4500) would be based on 2019 income. I provided 1099-MISC (gross) rather than Schedule C (net) because that is what was asked of me. My loan officer/Lendio/Customer’s Bank never asked for Schedule C, plus I’ve yet to file 2019 taxes.

As an independent contractor, I pay for all of my own overhead. Gear, rent, etc, which significantly brings down my net income + taxes owed after calculating those losses... which in turn brings down my forgivable loan amount (to my knowledge).

With that being said, I’m set to receive funding this morning per the bank.

I’m afraid that when I file my taxes there will be major issues and I’m tempted to just send back the $$.. anyone else in a similar boat? It’s such a weird situation.

(edited for clarity)

 

[fender57]

@itjesus Yeah I still have not received loan documents or any kind of update. Hopefully hear something today

 

[itjesus]

@fender57 What bank/fintech co did you apply with?

 

[fender57]

@itjesus Lendio/Ready Capital

 

[itjesus]

@fender57 PM’d you

 

[joeriley]

@itjesus I was approved for a new 2020 business (jan/feb 2020 financials) using my Feb2020 bank statement showing an ACH income deposit, and a Q1 Profit&Loss report from quickbooks. They used the profit and loss net profit, which included the income and a handful of expenses, to calculate the loan. No tax forms. I realize now that the bank statement may have been enough, or a simplified P&L statement that didn't have quite so many expenses would have meant a larger approved amount.

Take the funding they give you, assume it was based on the "best info you had at the time". And then file your taxes as you normally would.

It may effective some of your forgiveness levels if they base it off 2019 tax forms though. Just be warned if you're doing something like claiming a net loss in 2019.

 

[itjesus]

@joeriley As long as you give them your net profits, you’re good. In your situation it just so happened to be through Quickbooks rather than Schedule C which is fine.

So you’d be able to get about 73.5% forgiven automatically (net profit divided by 52, times 8). The rest can be used for utilities and the like in order to get full forgiveness.

In my case, however, I’m afraid that they’ll look at my Schedule C w/ deductions and losses and deem the loan unforgivable by default. Which renders it useless to me

 

[joeriley]

@itjesus You can always attempt to file for an extension on your taxes until Oct 15; and then get it forgiven based on the approval numbers as the best info you have, once again. Or better, draft a Sch-C based on the approval numbers. Since many approvals were based off drafted sch-c anyway.

 

[christianbikerg]

@itjesus Btw, I just downloaded the schedule c and filled it out myself based on my quickbooks report. I sent my “rough draft”. I’m sole prop (LLC) w no employees and no taxes filed. Received mine thru PayPal

 

[setfree1983]

@itjesus I'm in the same boat, and gave up on the ppp when I saw the schedule c requirements, because I had a net loss last year. However, the SBA has always said that the lenders should go off the available guidelines when the borrower applied. When the program started, SBA did not require schedule c, so I think some of us are getting lucky. I woke up today, with a docusign document from lendio/ready capital in my email. Hopefully this is the last hurdle for me.

 

[itjesus]

@setfree1983 Same! I didn’t have a loss but I “broke even” basically. Fortunately you’ve got your docusign though which means, pending a tragedy, you’re getting funded. This is what mine and other colleagues of mine’s loan officers have told us. And despite the SUPER long drawn out wait, drama and bad news surrounding the loan, I have no choice but to believe it seeing as though we’re at the end process of funding now.

For me personally, I’m not sure the PPP is worth the trouble it could potentially bring with it. I’ll be speaking with my CPA and will update if I get further guidance

 

[setfree1983]

@itjesus I think the EIDL and PPP are good, both just need more money. I'm just curious to see if most lenders will follow SBA rules for forgiveness. Lenders are pretty much supposed to take business' word that the loans were properly used. Otherwise. 2 years to pay of a loan at 1% interest ins't too bad. And that period probably will get extended based on how long its taking to get the economy going.

 

[itjesus]

@setfree1983 I feel like the PPP, although intended for small businesses, was really more catered to those who have employees. IMHO there should’ve been a separate program for independent contractors and self employed individuals that had different rules/regulations surrounding it.

 

[setfree1983]

@itjesus I totally agree!

 

[vitfitprayer]

@itjesus Totally this! This is going to get extremely messy for us.

 

[harko]

@itjesus I was approved and funded by BofA with just my 1099-Misc as an independent Contractor.

 

[vitfitprayer]

@itjesus There are a bunch of us in this boat. I was approved on my profit and loss for 2020. My current business was started in October 2019 and my net income was 0 for it. This is because I'm paid net 90 on most of my jobs so I didn't start earning actual any money until January. Then this hit and I haven't had no work since. I was on track to make 7-9k per month so I got a PPP for 22k. Not sure what the outcome is going to be in a few weeks. I don't have the ability to send it back otherwise I'd be broke.

 

[itjesus]

@vitfitprayer And this is the point I’m raising here.. for many of us single entities, the PPP loan was a last hope to get funds after weeks and sometimes months of no work.

We don’t have employers to get proper unemployment, and had to wait until around 2 weeks ago to get our own PUA portal for unemployment (at least in NC).

On the other hand, a TON of us don’t make the money that larger, “small” businesses make that have employees. It’s much easier to pay your employees 75% of the PPP loan and use the remaining 25% on rent and utilities.

But if you’re a single entity in the same position, you pay yourself around 73.5% of the loan and still get left with $$ that will need to be repaid. And you can’t use the remaining 25% for utilities if you wrote that as an expense for your business on your Schedule C (which most of the REALLY small businesses who truly needed the funding to stay afloat would typically write as a loss).

It’s just messed up to me.

 

[vitfitprayer]

@itjesus I honestly wish I had the ability to return the money. I'm sitting here waiting for a call from the FBI or who knows saying I'm being charged with fraud or something. They didn't open it to us sole prop until the last minute and I just rushed through the process hoping to get something to stay afloat. I can't say 100% I got it all right.

 

[itjesus]

@vitfitprayer Worst case I believe we have until May 14th (someone correct me if I’m wrong) to return the loans. The original date would’ve been tomorrow if you already received your loan