To qualify for a PPP loan, your S corporation needs wages. It sounds like you guys haven’t done that. I.e., that you haven’t paid shareholder-employee W-2 wages as is required.

Bottomline: I think you can’t get a PPP loan. Your monthly payroll costs equal zero. So the PPP loan you qualify for, 2.5 times your “zero” monthly payroll costs, unfortunately, equals “zero.”

Sorry. 🙁

Because we’re an S-Corp, the amount on our K-1 is passed through to our personal taxes and reported on Line 17 of Schedule 1 (Rent, Royalties, Partnerships, S Corps, etc).

Is our business eligible for the PPP Loan? Would this type of income be considered as payroll? If so, would the amount of the loan used toward lease payments and overhead be forgiven?

The building our store is in, is closed to the public…so we have zero revenue, but still have to pay our monthly lease….

We applied for the EIDL loan over a week ago. I feel like this is more applicable given our situation, but we still have not heard back.

Thanks in advance

I think if you have two partners each earning over $8333 a month, that you apply for $16,666 times 2.5.

See the reader comments though about problems of applying as a partnership…

This blog post provides best explanation I have: PPP Loan accounting tips.

Any advice would be appreciated on this;

Wife & I are 2 member LLC, 51/49 %. Our income was over the $100k cap for each of us. Would we be limited to just $8,333 for total, or can we put 2 x $8,333 for $16,666 total? The SE income being shown on our K-1 line 14.

Trying to understand if we apply together 1x for our LLC and include both our $8,333 as total per month or $16,666 per month vs if we would need to apply separately.

Thank you for your guidance.

I think you can hire and raise people’s pay rates.

Also, shareholder-employees can be paid and shareholders should be able to take distributions.

The issue about whether a firm can deduct the spending funded with the loan is odd. This doesn’t really make sense to the accountants. But it appears to me that you can count amounts spent as deductions… and that contrary to the usual way things work (and maybe contrary to common sense and logic) you won’t count the cancellation of debt as income.

I am in a similar situation. Wife & I are 2 member LLC, 51/49 % same as Sean above. Our income was over the $100k cap for each of us. Would we be limited to just $8,333 for total, or can we put 2 x $8,333 for $16,666 total? OR can I put our full SE Box 14 total for each of us combined (would be more than the $100k cap?

I think I would follow the bank’s instructions. My worry is you reach for bigger number… and then the money runs out.