can anyone with S corp apply for PPP loan as one of the key criteria is loosely defined like impacted by COVID. Of course everyone is somewhat impacted. Or business must be impacted heavily with loss of revenue etc. then only one can apply for this loan. Please advise.
I am a single owner S- corp ..not much impacted at this time but do not know about tomorrow as working as a contractor. Can I still apply for this loan and the worst-case bank can reject it..right?
You should apply.
Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with
500 or fewer employees can apply.
What can I use these loans for?
You should use the proceeds from these loans on your:
- Payroll costs, including benefits;
- Interest on mortgage obligations, incurred before February 15, 2020
- Rent, under lease agreements in force before February 15, 2020; and
- Utilities, for which service began before February 15, 2020.
What counts as payroll costs?
Payroll costs include:
Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
State and local taxes assessed on compensation; and
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.
As part of your application, you need to certify in good faith that:
- Current economic uncertainty makes the loan necessary to support your ongoing operations.
- The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
- You have not and will not receive another loan under this program.
- You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
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What about a Sub-S owner who gets paid a Salary (very typical). Is the intention to give their business the Loan Forgiveness "benny" to keep paying themselves - just like a business who has non-owner employees?
Failure to pay a reasonable salary to the owner/employee of the S-corp is the number one audit hotspot for an 1120-S ... so how can you ask for a PPP loan to cover employee pay if you have no employees ? Sounds like you are trying to get something for doing it wrong ... if you are the only person employed by the company then the IRS expects you to file payroll tax reports. Seek local professional guidance to get this set up correctly if you do not take a paycheck at this time.