The U.S. Senate passed legislation on Tuesday, April 21 to replenish funding for several coronavirus small-business relief programs championed by NAR and available to REALTORS®. The House is expected to take up the measure later in the week.
Under the Senate agreement, the Paycheck Protection Program (PPP) will receive $310 billion in new cash, while the Economic Injury Disaster Loan (EIDL) fund will receive an additional $50 billion. The bill sets aside $60 billion of PPP funding exclusively for small and medium-sized community banks. The Senate bill also contains $25 billion for coronavirus testing and $75 billion for hospitals. More information can be found here.
Quick Guidance for REALTORS® on the PPP and EIDL
- If you’ve already applied for an EIDL: The SBA is processing applications already in their system on a first-come, first-served basis. You do not need to reapply.
- If you have not already applied for an EIDL: Check back at the SBA application page once the additional funding is signed into law. The SBA will re-open applications shortly afterwards.
- If you’ve already applied for a PPP loan through an SBA lender but have not been approved yet: Check with your lender to see if they are maintaining a queue of applications during the lapse or if you will need to reapply when the renewed funding comes through.
- If you have not applied yet for a PPP loan through an SBA lender: Have the application form filled out and your documentation ready to provide to your lender. (For businesses with employees, have payroll documentation; for independent contractors, have your 2019 Form 1040, Schedule C, and 1099-MISC.) If you have an existing relationship with an SBA lender, you should go to that lender first once the program reopens, but be prepared to try multiple lenders, which you can find on the SBA site.
IRS Launches Stimulus Check Tracking Portal: “Get My Payment”
The new IRS’ new “Get My Payment” tool allows taxpayers to check on the status of their stimulus payments and confirm whether the money is arriving via direct deposit or paper check. You can also enter new bank information if your direct deposit account isn’t on file.
PPP Changes Announced by SBA
Last week the SBA released a new rule which clarified the forgivable portion of the PPP Loan. For independent contractors and sole proprietors without employees, PPP loan forgiveness is now limited to a proportionate eight-week share of the borrower’s 2019 net profit, which would be reflected in the individual’s 2019 Form 1040 Schedule C. In other words, if that individual wants 100% forgiveness for their PPP loan, they will need to limit their loan request to 8 times their average weekly net profit (rather than 2.5 times their average monthly net profit).
Though independent contractors and sole proprietors may still request a loan amount up to 2.5 times their average monthly profit as set forth in the CARES Act, loan proceeds above 8 times their average weekly income may not be forgivable and will be treated as a conventional loan which must be repaid.
EIDL Changes Announced by SBA
Last week the SBA announced a change to how it will administer EIDLs and the advance grants. In order to meet the high demand and provide funds to the greatest number of applicants, the SBA is now conditioning advance grant amounts on employee numbers – $1,000 per employee, capped at $10,000. In addition, some SBA loan counselors have advised applicants that the EIDL is being capped at $15,000 per business, bringing the total maximum amount to $25,000.
While NAR understands the SBA’s goals in reducing the loan and grant amounts, we are concerned that this dramatic change in the implementation of the programs will reduce their usefulness for many small businesses and disproportionately impact independent contractors who do not have employees. NAR has expressed these concerns to Congress (see above) and urged them to provide additional funding to the SBA loan programs in future COVID-19 relief bills in order to ensure that the programs can provide adequate funding and assistance to businesses in need during the crisis.