SBA disaster loan for one member LLC..

I have a client with Sch C LLC business who wants to apply for the sba loan..

Does anyone know if a one member LLC needs to fill out SBA-5 or SBA-5C?

It would be form 5C. More importantly:

Have them call their bank first thing tomorrow morning and inquire about the payroll protection program loans.

The loan amount is 2.5 x your average monthly payroll costs:

For Sole Proprietors, Independent Contractors, and Self-Employed Individuals:

The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

They are also eligible for the EIDL, but in most scenarios, the PPP is a better option. They can always apply for both as long as they do not cover the same expenses.

Is this the same as the Payroll Protection Program?
For detail article see https://blog.accountingprose.com/what-i ... on-program

It would be form 5C. More importantly:

Have them call their bank first thing tomorrow morning and inquire about the payroll protection program loans.

The loan amount is 2.5 x your average monthly payroll costs:

For Sole Proprietors, Independent Contractors, and Self-Employed Individuals:

The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

They are also eligible for the EIDL, but in most scenarios, the PPP is a better option. They can always apply for both as long as they do not cover the same expenses.

Thank you!

AccountingNinja, I'm looking for the statutory language that gives that formula you quote. I may have missed it or looked in the wrong place or mine is out of date. Can you post a link to its source please?

My personal copy of the new law shows this:

(c) Maximum Loan Amount.—During the covered period, with respect to any loan guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) for which an application is approved or pending approval on or after the date of enactment of this Act, the maximum loan amount shall be the lesser of—

(1) the product obtained by multiplying—

(A) the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the 1 year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the period beginning March 1, 2019 and ending June 30, 2019; by

(B) 4; or

(2) $10,000,000.

OP makes me think of this comparison for an LLC where the only worker is the sole member:
Disregarded entity - no payroll goes into the formula
Check th box as S corp. and take, say, $50,000 salary, the $50,000 goes into the formula
Is that true?

March 1, 2019 to June 30, 2019 calculation can be used by seasonal employers. The standard is the previous 12 months average x 2.5.

Trying to copy the text from the PDF is a pain and I don't have the energy to re-type the whole thing. It's on page 18 of the final version PDF.

The 2.5 formula comes from CARES ACT section 1102(a)(2) in the additions to 15 USC 636. Look for (E) - Maximum Loan Amount.

The definition of "payroll costs" seems to include income of sole proprietor's too. See CARES Act section 1102(a)(2). Specifically the addition of (bb) to the definitions section of the Payroll Protection Program.

“(viii) the term ‘payroll costs’—
“(I) means—

“(aa) the sum of payments of any compensation with respect to employees that is a—

“(AA) salary, wage, commission, or similar compensation;
....

; and


“(bb) the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year, as prorated for the covered period; and

It's not entirely clear to me, but arguably the same "payroll costs" give rise to forgiveness under section 1106(b). Hopefully this will be clarified in the forthcoming regulations.

https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.xml#toc-HCCF2DA7CBD6341059EAB97C24489743B

It's not entirely clear to me, but arguably the same "payroll costs" give rise to forgiveness under section 1106(b).

(8) the term ‘‘payroll costs’’ has the meaning given that
term in paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as added by section 1102 of this Act.