Last Updated April 16, 2020
Today Realtors® became eligible to apply for benefits under the Paycheck Protection Program (PPP). This was one of three programs included in the CARES Act designed to extend benefits to independent contractors, sole proprietors, and small businesses in order to help mitigate the economic impacts of COVID-19. In addition, the Massachusetts Department of Unemployment Assistance announced that it plans to start accepting unemployment benefit applications by April 30. Click here for a brief explanation of all available government benefit programs. For more in-depth coverage, see NAR’s write-ups (Pandemic Unemployment Assistance Program, Paycheck Protection Program and Economic Injury Disaster Loan Program).
The PPP provides loans to cover payroll costs, rents, mortgage interest and utilities between February 15 and June 30, 2020 for those experiencing economic hardship as a result of COVID-19. Eligible applicants can receive the lesser of 2.5x the average monthly payroll expenses they had for 2019 or $10 million. When calculating payroll expenses, employee salaries are capped at $100,000 and independent contractors are not included in the employee count.
PPP loans provide a particularly attractive option for eligible applicants because they are 100% forgivable as long as at least 75% of the total loan amount goes towards payroll costs and the same number of employees are maintained on staff. The remaining 25% of the loan can be used for other qualifying expenses such as rents, mortgage interest, and utilities. Borrowers who do not qualify for forgiveness must repay the loan over ten years at a 4% interest rate.
Applications for the PPP must be made through a Small Business Administration (SBA) approved lender. The SBA has a model application form available online, but some banks require the use of their own forms, so check with your bank before completing the model form. We have heard from the first wave of applicants (small businesses and sole proprietorships could apply starting 4/3) that many banks will only extend loans to applicants who have existing relationships with them. The Federal Government is looking for ways to incentivize banks to serve others and may also give temporary lender status to other banks.
At a minimum, borrowers will need to provide documentation of their average monthly payroll for the year prior to receiving the loan. However, documentation requirements differ by lender.
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