The majority of real estate brokers seeking help from the federal government’s paycheck lifeline program will have to wait until Friday to do so.
The Small Business Administration’s $350 billion Paycheck Protection Program, which offers forgivable loans that can be used to cover expenses like employee salaries and rent amid the coronavirus crisis, launched on Friday.
But real estate brokers and others who work as independent contractors or are self-employed will have to wait until April 10 — a full week after companies could begin applying — to file their applications for the first-come, first-served loans.
The National Association of Realtors said it first became aware of the separate deadlines last week when the applications for the program were first released.
“We believe this was done to stagger the applications lenders will receive at any given time; while also giving the SBA and lenders more time to get their ducks in a row when it comes to independent contractors and all that comes as everyone adapts to a new program and unique circumstances,” NAR spokesperson Wesley Shaw told The Real Deal.
Representatives for the Small Business Administration and the Treasury Department did not immediately return requests for comment seeking clarification.
As part of the $2 trillion stimulus package that President Trump signed two weeks ago, the federal government has expanded forms of economic assistance such as small business loans and unemployment benefits to independent contractors and the self-employed, groups that were normally excluded from such programs.
The Paycheck Protection Program allocates nearly $350 billion for forgivable loans that companies and the self-employed can use to cover eight weeks’ worth of expenses like salaries and mortgage or lease payments.
The loans are capped at $10 million and salaries limited to $100,000 per employee. The government will forgive loans for borrowers who keep their payroll expenses at 75 percent of their normal levels.
Brokers who work as independent contractors can apply for the loans as individuals; the companies they work for can’t count them as “employees” and apply on their behalf. Brokers can show their income from the previous year and use it to calculate the “salary” to be paid out from the loan.
It’s an unprecedented program from the federal government, which is offering to pay businesses’ largest expenses to keep the workforce going, with the Covid-19 pandemic virtually having shut down the nation’s economy.
But there are questions about how effective the loan program will be. Some experts believe that the $350 billion allocated will fall far short of the sum companies will need. And the SBA is relying on banks to administer the loans, many of which initially said they wouldn’t be ready to start accepting applications on April 3.
Brokers are also having trouble negotiating the application process. Many of the banks administering the program are only accepting applications from existing customers.
That means brokers who didn’t have a business checking account set up before the crisis may be locked out.
NAR’s Shaw said the organization is aware of the concern, and is urging members to be patient and persistent.
“Keep reaching out to lenders and they will continue receiving guidance and direction from the Treasury and SBA throughout the rollout, and as we progress further the hope is that familiarity and efficiency will increase,” he said.
The SBA provides a list of lenders participating on its website.
Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229.
The post Brokers must wait to tap SBA forgivable loan lifeline appeared first on The Real Deal Los Angeles.
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