SBA loan update (no employees, 2 shareholders)

[ILLMAS]

Just found out, one of my client received $1,000 per shareholder (1120S no employees) from the SBA, I guess it's good news.

[Lion EA]

Tell your client that shareholders who provide services to the S-corporation ARE employees and need to be on payroll.

[ILLMAS]

Funny you mention that, for the last years they been loaning money to their business just to cover the expenses, would be impossible to receive a pay, but they were on the payroll when the business had a profit many years ago.

[JohnH]

Do you think maybe they filled out the Advance EIDL application incorrectly, stating they have 2 shareholders when in fact they have none?

 

[ILLMAS]

1 hour ago, JohnH said:

Do you think maybe they filled out the Advance EIDL application incorrectly, stating they have 2 shareholders when in fact they have none?

 

It’s possible, they filled out their application in early April when there was no guidance, we were all thinking it was a $10,000 loan, then around mid April it was announced it was $1,000 per employee, so you might be right.

[JohnH]

Sorry, I had a typo in my reply, but you got the point nevertheless.  I meant to say "stating they have two employees when in fact they have none"

[ILLMAS]

7 minutes ago, JohnH said:

Sorry, I had a typo in my reply, but you got the point nevertheless.  I meant to say "stating they have two employees when in fact they have none"

I was remotely log-in to another client computer (Sch C client) and when the question about the employees came up, they have zero employees and that is what was entered, but owners information was entered and the application was completed.  So for the 2 shareholder business, I could see them entering the two shareholder=owners (with zero employees) information and completing the application.  The Sch C client has not reached to me yet, so I don’t know if they received $1,000.  I believe my client filled out the application truthfully and I appreciate the concerns, most of us have been supporting our client in whatever we can.