PPP Loan Application Question (US hosts)

[Stephen805]

Hello. Last week, I connected with an SBA lender here in Pennsylvania, and completed their application for the SBA’s “PPP (Payroll Protection Program)” loan program, with the understanding that this lender would be submitting my application to the SBA today (04/10/20).

This morning, however, the lender called me to let me know that their attorneys are telling them that my “vacation rental” business (which has been my sole source of income for nearly 5 years) does not qualify for the PPP program, and they will not be submitting my application to the SBA. I tried to get specifics as to why, but the gentleman at the bank was not able to provide any other information. He then named a couple of other banks that I could try.

Airbnb claims that US hosts “may be eligible for” this program, here:

https://www.airbnb.com/resources/hosting-homes/a/federal-covid-19-economic-relief-resources-for-us-h...

I am wondering if there are any US hosts out there that might know anything specific about this topic, or have had any luck with this program, good or bad.

Thank you.

[Rhonda45]

I am hearing the same thing from our bank.  Did you receive a 1099 from AirBnB?  We didn’t and our earnings were over $20,000.  They want a 1099.  Our bank doesn’t know much about it. 

[Stephen805]

I've never gotten a 1099 from Airbnb (nor from the other platforms on which I am listed) in the 5 years that I've been hosting - I refer to www.airbnb.com/users/earnings_report   My lender requested my 2019 'Schedule C' as backup.

[Michelle53]

The PPP program is for small businesses with employees. i.e. people you employ for wages, for whom you provide a W2 at the end of the year. The application requires payroll tax returns to be  provided. PPP loans may be forgiven if the money is used to retain/rehire employees. Otherise, it becomes a loan. 

The SBA EIDL is the program for self employed individuals, i.e. people who receive a 1099, or file a Schedule C.  It is a loan which, eventually, needs to be repaid. 

https://covid19relief.sba.gov/#/

Sorry, I am not able to help anyone complete the application. 

[Michelle53]

Amending my comment above - the PPP application, as of today, allows for applications by 1099-MISC subcontractors and self employed individuals (gig workers) who pay self employment tax. Schedule C on the tax return.

This is not the same as rental income.  Schedule E on the tax return.  EIDL still applies to rental income losses. 

[Chris1931]

Not true - self employed can get...you need to have income on schedule C (or F?)

apply here- takes 20 min if you have your tax return 2019 or 2020, ID and bank info.

[Adam-and-Ike-0]

Just spoke with our bank about this right now (04/10/2020) and they seemed to think we would qualify, though they did say that they haven't yet dealt with anyone related to the PPP who was in a similar situation (property rental business).

They made it clear though that even paying ourselves is considered "wages" and as long as 75% of the SBA loan (which comes in one lump sum) goes to pay "wages" then the loan would be forgiven, which is what the SBA stipulates. We also have a co-host with our rental whom we pay on a weekly basis (a certain percentage of the earnings to manage our listing + any cleaning fees).

Now, based on what y'all are saying I'm debating on whether or not I was given accurate info. Hmm...

[Michelle53]

You should go through the application I linked above. It's more relevant to a rental income business. 

PPP is through a bank. The EIDL is directly through the SBA. 

The PPP is a two-step process. First, the bank takes the application, then they submit it to the SBA for a loan number. Then they come back and ask for the supporting documents, after which, if the loan is approved, it goes to closing via the bank's process. 

[Glenn-and-Xin0]

Persons with no employees are also eligible for PPP.  1099, gig workers, self employed.

[Michelle53]

Airbnb doesn't issue a 1099-MISC.   They issue a 1099-K.  It's to do with electronic payments.   Airbnb is a payment processor (not an employer).   A 1099-MISC is generally issued to people paid as  self-employed subcontractors (such as a cleaning service)  or consultants, earning $600 or more. 

"US persons who have earned over $20,000 and had 200+ reservations

The US Internal Revenue Service (IRS) requires US companies that process payments, including Airbnb, to report gross earnings for all US users who earn over $20,000 and have 200+ transactions in the calendar year. If you exceed both IRS thresholds in a calendar year, Airbnb will issue you a Form 1099-K.

Delivery of Form 1099-K

Any Form 1099-K issued to you will be available in your Payout Preferences. You'll receive an email notification when your form is ready, typically in late January of each year. We also mail a copy to the address you provided along with your taxpayer information, unless you opted for electronic delivery only. You may receive more than one Form 1099-K if your taxpayer information is listed on multiple Airbnb accounts."

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

https://www.irs.gov/businesses/understanding-your-form-1099-k

https://www.irs.gov/forms-pubs/about-form-1099-misc

[Rae-And-Stephen0]

Airbnb hosts generally SHOULD be eligible for the PPP/SBA loans. We just filled out our application and I am including the following links within an attachment to the application in case the lender questions eligibility:

https://www.airbnb.com/d/host-message

("We have worked together to secure support for hosts in the US Government’s recent COVID-19 Stimulus Bill. This legislation now allows for US hosts to take advantage of many relief measures, including small business grants, small business loans, and unemployment assistance. A huge thank you for the more than 105,000 calls and emails you made to members of Congress.")

and: https://www.nbcnews.com/health/health-news/blog/2020-03-25-coronavirus-news-n1168156/ncrd1169086#blo...

("Airbnb hosts can get small business loans through federal relief bill
Airbnb hosts will be eligible to receive small business loans and unemployment insurance through the coronavirus relief bill.

"We are deeply appreciative of bipartisan Senate and House leadership for recognizing there is a new sector of the workforce who depend on Airbnb for their monthly economic needs,” said Chris Lehane, Airbnb’s vice president of policy and communications.

The bill, as it is currently written, requires eligible borrowers to show that they need the loan because of the uncertainty of the economic crisis caused by the virus. The loan can only be used to maintain payroll, leases and utility payments.")

Hope this is helpful (and hope it works!)

[Rae-And-Stephen0]

Update - our bank denied our application. They said that is because we were using Schedule E instead of Schedule C. They said it's possible those references in the articles above are assuming hosts use Schedule C, or only applying to the disaster relief program. I don't know. Its a crapshoot.

[Lucas298]

That's the core problem. Most hosts will be filing a Schedule E so we wont be eligible for PPP. What a joke Airbnb is that they have such a poor understanding of how most hosts file taxes that they seem to think CARES will benefit anyone but a tiny percentage of hosts. The ones it will potentially help are the ones running their Airbnb businesses as small real estate empires and not the hosts who are doing what the essence of the platform was supposed to be - hosting out of their own home.  

[Kelly149]

EIDL will pay out $1000 max/employee regardless of business volume losses and I believe the program has already run out of money... I don't think STR hosts should be counting on much of a bailout on this

[Tim670]

Has anyone been able to secure PPP money yet? I submitted my application but still waiting to hear back.