FINANCIAL RELIEF FOR REALTORS®

March 26, 2020 Lara Locke

FINANCIAL RELIEF FOR REALTORS®

Updated on March 25, 2020

NOTE: The Senate has just passed the Coronavirus Aid, Relief and Economic Security (CARES) Act, a stimulus package that will provide direct financial assistance to small business owners and independent contractors, as well as direct financial payments to individual taxpayers. C.A.R. is closely monitoring the situation will keep you updated with detailed information on how REALTORS® are affected once the CARES Act passes.

C.A.R. has been working diligently, in conjunction with NAR and other organizations, to ensure REALTORS® are included in federal and state financial relief efforts. The following relief programs are already available to REALTORS®, and we will continue updating this page as additional programs are made available.

U.S. Small Business Administration (SBA) Loans

The U.S. Small Business Administration is providing low-interest economic injury disaster loans (EIDLs) to small businesses that have been severely impacted by COVID-19. Small businesses may qualify for loans of up to $2 million to help them overcome temporary loss of revenue during the pandemic. These loans can be used for fixed debts, payroll, accounts payable and other bills. Long-term repayments (up to 30 years) are available. You can find more information on the SBA website here, and you can apply for a loan here.

The pending CARES Act includes draft language that would expand the existing SBA 7(a) Loan Program to address working capital needs of small business and independent contractors during the COVID-19 pandemic. The act would allow businesses with fewer than 500 employees (including sole proprietors, independent contractors and other self-employed individuals) to qualify for SBA loans of up to $10 million. The loans could be used for payroll expenses (including paid sick leave), employee salaries and rent and mortgage expenses. The loans would be forgivable if used for these approved purposes during March 1 and June 30, 2020. Any reduction in workforce would result in a reduction in the amount of forgiveness of the loan. We will keep you updated as soon as we have more information on this program.

Please note that a borrower receiving a 7(a) loan for employee salaries, payroll support, mortgage payments and/or other debt obligations would not be able to receive an SBA economic injury disaster loan (EIDL) for the same purpose, or commingle funds from another loan for the same purpose. REALTORS® would be expected to choose between the two programs, rather than apply for both. REALTORS® may want to consider delaying application under the existing EIDL program until more information on the 7(a) program under the CARES Act becomes available.

Tax Credits for Sick Leave for Independent Contractors

The recently passed Families First Coronavirus Response Act (FFCRA) provides independent contractors with two new key benefits. First, independent contractors who are diagnosed with or must self-isolate due to COVID-19 can now claim a tax credit for sick leave. This credit is also available for independent contractors caring for a child due to school or childcare closures. Independent contractors may also claim a tax credit if they must take leave to care for a seriously ill family member. Both these credits are refundable and creditable against income and self-employment taxes.

Direct Financial Assistance for Small Business Owners and Independent Contractors

The pending CARES Act is expected to provide for “Pandemic Unemployment Assistance” payments to business owners and independent contractors, including most REALTORS®. This program will provide for payments similar to unemployment insurance payments. If the bill is passed, REALTORS® who otherwise qualify will be eligible for payments of $600 plus the amount for which the REALTOR® would be eligible under state unemployment compensation law as if the REALTOR® were an employee. Payments would be available for up to 39 weeks. An additional 13 weeks of unemployment compensation may be available if those 39 weeks are exhausted.

Additionally, the bill would provide tax rebate payments of $1,200 per adult and $500 per child to taxpayers whose adjusted gross income was $75,000 or less for individuals or double that amount for joint return filers. For income levels above those thresholds, the payments would be phased out. Individual taxpayers with annual gross incomes above $99,000 and joint filers with annual gross incomes above $198,000 are not expected to receive any payments. C.A.R. will continue to keep you updated as more information becomes available.

Relief Programs for Employers

Under the FFCRA, employers with fewer than 500 employees must provide two weeks of paid sick leave to employees unable to work (in person or remotely) in many circumstances. The employer will receive a tax credit to offset the cost of providing this paid sick leave. C.A.R. has provided more information for employers — including their obligations under the FFCRA, the Family and Medical Leave Act (FMLA), California’s paid sick leave law and the California Family Rights Act (CFRA) — here.

Additionally, draft language of the CARES Act suggests the bill will provide payroll tax credits to employers who continue to pay employees while either fully or partially suspending operations due to the pandemic. These credits also would apply to employers who see gross receipts decline by more than 50% compared to the same quarter in the prior year. Certain restrictions or limitations are likely to apply. C.A.R. will provide more information once the CARES Act passes.