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SBA Loan Assistance for Hosts April 9, 2020

If you missed the Webinar with Julie Clowes of the SF office of the US Small Business Administration, you can watch it here. (NOTE: The webinar was 1 hour long so this is a long presentation and a lot of bandwidth) A summary of the contents is below.

Hosts may apply for BOTH the EIDL and PPP loans.

Economic Injury Disaster Loan (EIDL)

Apply for EIDL directly from the SBA here: https://covid19relief.sba.gov/#/

Most hosts will choose “Applicant is an individual who operates under a sole proprietorship”

Gross revenues would be taken from your business income on your tax return (Schedule C or E, most likely)    Since the “Disaster” happened in March, you may  to use March 2019-Feb 2020, but it’s probably acceptable to just use 2019 Tax return data if you have that.

Cost of good sold.  It’s probably ok to put 0 in here.   Your SBA loan agent can clarify when processing your loan.

When asked what industry, it’s been advised that hosts are “Hotels or Lodging”.  If you host under a separate corporate structure, you need to use that corporate structures industry type.

The EIDL comes with an advance. The advance is equal to $1000 per “employee” for sole proprietors, this is $1K. 

The loan would be a 3.75% interest loan for up to a 30 year term.   The advance is forgiven, but would count against forgiveness portion in the PPP loan.    Loan payments are deferred 12 months.

Even if you aren’t sure you need this money, it might be worth getting the money.  You can always pay off the loan if you didn’t use the money, but you can also use it for “ordinary business expenses.”  so it might be helpful to use this money to pay bills (especially if you might otherwise need to use higher interest credit cards or lines of credit).

Paycheck Protection Program (PPP) Loan

Check with your lender to see if they’re using the SBA loan form or if they have the own.  The SBA loan form is here: https://www.sba.gov/document/sba-form–paycheck-protection-program-borrower-application-form

This will help you understand what information your lender will be expecting from you.

Average monthly payroll is the average monthly earnings.   If your hosting business is seasonal, you can use March 1-June 30, 2019 as your computation for season.  You may want to look at March 1 – June 30, 2019 and compute a monthly average then compute the monthly average over the past 12 months and use the higher number.    

the PPP loan amount can be forgiven up to it’s entirety as follows:

75% of the loan amount used for payroll (in a sole proprietor hosts case, this would be the lost income we would otherwise have received).   

The remaining 25% can be used toward Rent, Mortgage Interest, and Utilities.   If you host in your home and can only attribute a percentage of these costs as a business expense, that same portion can be applied toward the debt forgiveness up to 25% of the loan (or 1/3 of the amount applied to “payroll”/income – whichever is lower).

Payments are deferred 6 months.   Sometime before the end of the 6th month, the lender will verify the amount’s which can be forgiven (each lender will have a different process for doing this), they will then apply to the SBA to have that portion of the loan forgiven (theoretically, this would be the entire loan amount).   Any remaining loan amount continues at 1% interest for the remainder of the loans 2 year term.

Again, it’s advised that you get the maximum amounts for both loans.  If the entirety isn’t forgiven, the value of having access to the money is high relative to the interest, but you have have managed to reduce your expenses and have no loans on which your business pays interest, then you may not want to get more money than you need and should just apply for the amounts that are sure to be forgiven.

More info is available from the SBA:

SBA Customer Service Center (for Disaster Loans)

  • 1-800-659-2955 / 1-800-877-8339 (TTY)

Paycheck Protection Plan

SBA San Francisco District Office

SBS SF Resource Guide  (not covid related, just general SBA guidebook for Northern California)

City of San Francisco resources:

It’s unclear whether hosts are eligible for any of the city assistance, but there are links for zero-interest loans and other grants here:

Where to get a PPP loan

PPP loans for sole proprietors are available through https://www.kabbage.com/

We’ve heard from many hosts that some banks won’t process sole-proprietor loans, or they have to make over a certain amount of money or have a “business banking” relationship with the bank, however, here is a list of Banks that are providing PPP loans — you may want to check with your preferred bank first, and then try an alternative lender like kabbage.: https://smartasset.com/insights/ppp-loan-lenders?fbclid=IwAR2AiQDnpMLHHgITc0f9XQTMFOecvdK8XeCAm119Q6IpcfBBZr2dKstSkRY

If you wish to apply for a PPP loan through kabbage, here’s a handy guide: SBA-PPP-Loan-via-Kabbage.small_.pdf

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