PPP Loan - falling through the cracks here

[Ray-And-Lisa0]

The  PPP Loan is now requiring a schedule c and/or a 1099, and many of us are falling through the cracks!!

I applied for the PPP loan since I had to close down our Airbnb in our home, and now I'm probably not going to be eligible because they're requiring a 1099 and/or schedule C. My tax person insists the income should go on a schedule E. Furthermore, I earned over $25,000 as my sole and primary income last year with over 300 nights rented, but my actual reservations were 181, instead of 200. Because of this, I'm falling through the cracks to receive PPP assistance.

Please provide a 1099 for us so that we can get PPP loans.  We need more help from Airbnb to get the assistance we need. I've had zero income for two months  now.  

[Michelle53]

@Ray-And-Lisa0   This is a host and guest forum. Airbnb doesn't respond to requests for documentation here.    

What I can tell you is that Airbnb is a payment processor, not an employer, and, as such, issues a 1099-k, not a 1099-misc, which is issued to self employed people (Schedule C on the tax return) 

https://www.airbnb.com/help/article/414/should-i-expect-to-receive-a-tax-form-from-airbnb

Your tax person is correct - your  rental income is reported on Schedule E. In this case, the 1099-k won't help you apply for PPP. 

Only EIDL is available to Schedule E filers.

https://www.sba.gov/funding-programs/disaster-assistance/coronavirus-covid-19

[Ray-And-Lisa0]

Hey Michelle, I'm fully aware that Airbnb doesn't respond to requests for documentations here, but I was advised by an Airbnb employee to post here on the forum with everything I had discussed with her, so I did. 

I disagree t hat Airbnb is simply a  payment processing company. For example, Airbnb doesn't allow me to make all the decisions for my  business, such as when to refund or not refund a guests fees, despite what my refund policies are.  Airbnb will override my business decisions.  There are many other scenarios  I could site, but for sake of brevity, I will leave it at that. 

Lastly, Airbnb is the one saying we could apply  for PPP, and from my understanding lobbied for  Airbnb hosts to be eligible for PPP. Apparently, the schedule c vs schedule e debate continues to be a gray area with many filing on a schedule c. I've always thought it should be on a schedule c as it is my business  - where I actually spend between 3 -4+ hours per day,  and expenses "working" Airbnb. It's definitely not passive income. 

The latest Airbnb webinar pointed to a scenario for a sole proprietor filing a schedule c being eligible for PPP. Airbnb is basically saying take a gamble with your Schedule E and find a bank that will accept it.  You can catch it here: https://youtu.be/A43VBHa4zdU if you want to  learn more about how Airbnb is spreading information about PPP. 

[Michelle53]

@Ray-And-Lisa0    I'm not going to debate Airbnb's policies with you - that's not up to me.  

I tried to post something helpful for you.   Everyone's situation and business structure are going to be different, depending on how you operate your listing. 

 A sole proprietor filing a schedule c  is a specific tax scenario/business structure scenario under tax law.  Your tax advisor ought to be able to explain that to you better than I can. 

What I do know is that PPP and EIDL go through underwriting, since they are, in fact,  loans (whether or not a portion of the loan is forgiveable). 

I've heard of a number of cases where people filed applications that were eventually rejected because they may have made it through the bank application process, but failed later under the specific program requirements, because the documentation wasn't sufficient to support the loan request. 

In any event, it's Treasury and Congress that determine the program rules, not Airbnb. Just lobbying is not a guarantee that any one set of rules makes it into the final legislation.   EIDL was designed to be the place to go for people ineligible for PPP.     Folks here in the forum are now reporting they have received some funds through EIDL. 

https://www.cnbc.com/2020/04/14/self-employed-and-need-a-ppp-loan-you-should-wrap-up-your-2019-taxes...

"Exactly what banks will need will vary from one lender to another, but here’s a starting point of documents for independent contractors and the self-employed, per Vlietstra, Peterson and Treasury’s guidance:

• Completed income tax returns for 2019, including Schedule C.
• Forms 1099-MISC that spell out compensation you’ve received.
• Invoices, bank statements or a book of record that establishes you are self-employed and in operation on or around Feb. 15, 2020.
• Bank statements that show income paid to you.
• Got employees? Forms 941 and 940, which show Social Security and Medicare taxes withheld and payments toward unemployment, respectively.
• Proof of health-care and retirement plan contributions."

Sorry to break it to you, but trying to negotiate the rules of the PPP program in the community forum won't move your application forward with the SBA.  

[Katie269]

That is correct, I have a schedule E as well and my bank said I did not qualify for PPP, like Michelle said we can apply for EIDL which I did but I don't think she understands EIDL only pays our "UP TO $10k" per employee, since I am one person I received  $1,000.00 which doesn't really help seeing I lost tens of thousands since airbnb let my guests all cancel.

[Michelle53]

@Katie269   EIDL is a loan program.   Yes, it offers up to $10,000 as an advance .     (foregiveable, under the CARES Act).   The huge number of applications resulted in the advance being limited to $1000 per person. 

You can apply for an EIDL of up to $2 million to provide working capital for expenses such as fixed debt and payroll costs. The interest rate is 3.75% and the loan term can be as long as 30 years.

It was never designed to be a giant pot of free money.  It is bridge financing for folks suffering business interruption, until such time as they can get back on their feet, financially.   Usually, it is used by people suffering things like tornado disasters, hurricanes, agricultural disasters etc.   There are a lot of farms struggling right now, because supply chains are decimated.    I think the focus, right now, is directing EIDL funding toward the food supply, not the travel industry. 

You received funds from the program. That's more than a lot of people have received to date. 

[Kelechi-and-Oluchi0]

@Katie269 Thanks for this info Katie! Very helpful. Can you tell me though whether the $1K is forgivable or must be paid back with interest?

[Ray-And-Lisa0]

Thanks for your help. 

[Tim670]

Just to emphasize this to any else who reads it. I was denied by three different banks for a PPP because I did not have a schedule C. This is not AirBnb's fault at all. They have done their best.