CARES Act FAQs for REALTORS®
April 7, 2020
Q: What is the CARES Act?
A: An economic stimulus package passed by Congress in response to the COVID-19 pandemic.
Q: As a REALTOR®, does the CARES Act apply to me?
A: Yes. The CARES Act has multiple funding sources for which REALTORS® may be eligible, including 1) cash payments for individuals and families, 2) unemployment benefits for those whose employment has been impacted by COVID-19, and 3) loans and grants for small businesses. This includes money for independent contractors, sole proprietors, employees and real estate brokerages.
Q: What resources are in the CARES Act for individuals and families?
A: The CARES Act provides cash payments to most Americans based on income thresholds, up to $1,200 per adult plus $500 per child under the age of 17. For more information, see here.
Also, if you have a retirement account, including an IRA, the Act allows early withdrawals up to $100,000 without having to pay the early-withdrawal penalty for those whose finances have been negatively impacted by the coronavirus pandemic. If you withdraw funds from a pre-tax retirement account, you still must pay the taxes but can either pay the tax over three years or recontribute the amount over three years and waive the taxes.
Q: Are REALTORS® who are self-employed or independent contractors eligible for unemployment?
A: Yes, independent contractors and self-employed are eligible for unemployment benefits under the CARES Act. The Pandemic Unemployment Assistance Program (PUA) provides assistance to eligible self-employed workers and independent contractors who are unable to work as a direct result of COVID-19. PUA entitles unemployed workers up to $600 per week for up to a total of four months of unemployment. The Alabama Department of Labor will administer the relief provided in the PUA for eligible Alabamians. To be eligible, you must self-certify that you are otherwise able and available to work but you are unable to work due to specified COVID-19 reasons. Keep in mind that it may take a few weeks to receive a check due to filing and processing delays and that benefits may be taxable. To learn more about the PUA, you can view the Alabama Department of Labor’s (ADOL) CARES Act page here and file a claim here.
Q: Can REALTORS® access the small business loans and grants in the CARES Act?
A: Yes, the self-employed, independent contractors, sole proprietors, and real estate brokerages that employ 500 or fewer employees are eligible for both the U.S. Small Business Administration (SBA) 7(a) “Payroll Protection Program” (PPP) and the SBA “Economic Injury Disaster Loan” program (EIDL).
Q: What is the Payroll Protection Program (PPP)?
A: The PPP is a forgivable loan program to incentivize eligible businesses to retain workforce or to re-hire laid-off workers due to COVID-19. Covering the period of February 15, 2020 through June 30, 2020, loan amounts are based on the average monthly payroll expenses for the year prior to the loan, up to $10 million, and can be used for payroll, mortgage interest, rent and utilities.
Q: What is the Economic Injury Disaster Loan program (EIDL)?
A: Administered by the U.S. Small Business Administration, the EIDL is a loan program to help those businesses negatively impacted by COVID-19. The EIDL program provides up to $2 million for impacted businesses, with a potential $10,000 advance (disbursed within three business days of applying for the loan) that may be forgivable. The remaining amount is subject to repayment.
Q: I need money quickly. What funds are available?
A: The SBA is offering a $10,000 advance grant to businesses through the EIDL program. The grant may be forgivable and will be paid in as little as three days. To apply, go through the normal EIDL application steps here. However, if applying for an EIDL advance grant and a PPP loan, see related question below for the impact on loan forgiveness.
Q: Are these loans forgivable?
- PPP: Yes. Loans under the PPP may be forgiven if you use the loan to continue to employ or re-hire workers according to the program’s requirements.
- EIDL: No. Loans under the EIDL must be repaid, except for the $10,000 advance grant. Payments may be deferred for one year after loan origination.
Q: When can I apply for these loans?
- The PPP will roll out in two phases. On April 3, 2020, small businesses and sole proprietorships can begin applying. On April 10, 2020, independent contractors and self-employed individuals can begin applying. Once applications are available, you are encouraged to apply as soon as possible due to high demand and a funding cap. Check out the loan application in the question below so you can be prepared when it is time to file.
- The EIDL is available now.
Q: How do I apply for these loans?
- While the PPP application can be found here, you will have to submit the application to your participating local bank, beginning on either April 3 or April 10 depending on which category you fall into as discussed above.
- To apply for an EIDL loan, go here.
Q: I am eligible for these loans. Am I guaranteed to receive them?
A: No. Congress appropriated a set amount of funds for these programs, so, if an applicant waits too long to apply, an eligible applicant may not receive the funds.
Q: Can I take out both a PPP and an EIDL loan?
A: Yes. Businesses can take out both a PPP loan and an EIDL loan. If a business has already applied for or received an EIDL loan related to COVID-19 before the PPP was available, it is able to refinance the EIDL into the Payroll Protection Program for purposes of loan forgiveness. However, businesses cannot take out an EIDL and a PPP loan for the same purposes (i.e., to pay the same payroll or utility bills). Outstanding portions of the EIDL, if taken out for purposes other than those laid out as eligible for loan forgiveness under the PPP loan, will remain a loan.
Recipients of the $10,000 EIDL advance grant will have that amount subtracted from the amount forgiven under the PPP. (In other words, you cannot have that amount forgiven twice.)
Q: Where can I find more information on these loans?
- For the PPP, the U.S. Treasury issued this information sheet for borrowers.
- For the EIDL, the U.S. Chamber of Commerce provided this step-by-step guide.
- For both programs, additional commonly asked questions can be found here.
- NAR has an extensive CARES Act FAQ here.
- The State of Alabama put together this website containing a list of resources for businesses with links.