Recent media reports have painted a false narrative about real estate professionals who took out SBA Paycheck Protection Program (PPP) loans during the height of the COVID-19 pandemic. Unfortunately, the articles chose to focus on outliers and did not tell the story of the average REALTOR®.
Congress and the Small Business Administration intended PPP loans to function as bridge loans, keeping businesses open, employees on payroll, and bills paid at a time when many businesses were forced to pause their activities and faced uncertainty as to when they could reopen and whether customers would return. The real estate industry was no different. Early in the pandemic, open houses stopped and many of their clients, facing uncertainty about their financial future, chose to wait to purchase or sell a home. PPP loans provided a temporary source of income for these real estate professionals, including independent contractors and the self-employed.
Loan amounts were based on salary expenditures (with individual salaries capped at $100,000) and the number of employees, and there were strict regulations on what they could be used for: salary costs of employees, rent or mortgage interest for the business, utilities, and other business expenses. PPP loans allowed many real estate agents to keep their staff on payroll, maintain their business location, and cover their own income during an incredibly fraught time. As a result, these real estate professionals were able to return to work when local regulations allowed and assist their clients with their property needs.
NAR worked closely with Congress and the SBA to ensure that PPP loans were accessible for small businesses, independent contractors, and the self-employed, and that the forgiveness process was streamlined and easy to understand. The SBA set the forgiveness requirements, and if a real estate professional received a PPP loan and qualified for forgiveness, there was no bad faith at play. These loans functioned the way that the SBA and Congress intended – keeping businesses open so they could return to work and continue to help drive the economy forward.
In 2020, 80% of real estate firms had a single office, typically employing three full –time real estate licensees; 86% percent of firms were independent, non-franchised companies. The median salary of a REALTOR® was $43,300 in 2020. For many of these members, even if they went on to achieve success later, early 2020 presented a potential end of their career in real estate when faced with the prospect of multiple months without any income. PPP loans helped many of them to stay in business, to keep their employees paid, and ultimately to return to work when the situation allowed. Real estate is a major economic driver and has been critical to the country’s economic recovery, and without PPP, the country might have lost many of those who work diligently to participate in it.