FAQs: Small Business Administration (SBA) Loans for Agents

Updated on October 12, 2020

The CARES Act was passed on March 27 to provide financial relief to small business owners, independent contractors and other unemployed Americans.  There remain many ambiguous provisions in the law that continue to be clarified by rule-making at the federal and state agencies. We will continue to update this FAQ as any rules or other guidance are provided. Please check this FAQ frequently for updates.

Head to the COVID Legal Documents page on car.org for access to:

October 12 Updates


On October 8, the SBA, in consultation with the Treasury Department, released a simpler loan forgiveness application for PPP loans of $50,000 or less. Click here to view the simpler loan forgiveness application. All independent contractors and sole proprietors without employees will be able to use this short forgiveness application, since their loans were capped at $20,833. The Step-by-Step Loan Forgiveness guides haven been updated with information about this new short forgiveness application.




What assistance is available for agents from the SBA?

The federal government, through the U.S. Small Business Administration (SBA), is providing significant relief for small businesses suffering from the impact of the COVID-19 pandemic. Most agents are likely to be eligible for loans that are being made available through the SBA. The following options are available to REALTORS®:


  • Economic Injury Disaster Loans (EIDL)

  • SBA Express Bridge Loans (EBL)


This Q&A also provides information about the Paycheck Protection Program (PPP). Borrowers can no longer apply for a PPP loan, but C.A.R. is including information about how to obtain loan forgiveness for any members who have previously applied.



Which of the SBA loans should I apply for?

As described below, Paycheck Protection Program (PPP) loans were provided on very favorable terms, and they may have been the best option for most agents. If you have additional expenses that will not be forgiven if spent with PPP loan proceeds, an Economic Injury Disaster Loan (EIDL) may be a good option. However, keep in mind that EIDLs are conventional loans and not forgivable. If you need immediate financial relief, arranging an SBA Express Bridge Loan (EBL) (discussed below) with your lender is a good option.

Can I apply for both a PPP loan and an EIDL loan

Yes – but borrowers cannot take out an EIDL and a PPP loan for the same purposes. You could, if desired, have gotten a PPP loan to cover lost income and other costs that are forgivable under the PPP, and then get an EIDL loan to cover some of your other expenses. You should carefully review the options available to select the SBA loans that will be the best fit for your needs and circumstances.


If an agent applied for or received an EIDL loan related to COVID-19 before April 3, 2020 and used the loan proceeds to cover payroll costs, the agent will be able to refinance the EIDL into a PPP loan for purposes of loan forgiveness. Remaining portions of the EIDL, for purposes other than those laid out as eligible for loan forgiveness under the PPP loan, will remain a non-forgivable loan. Recipients of the EIDL emergency grant will have that amount subtracted from the amount forgiven under the PPP loan.


Note: The information in this section is included solely for reference purposes. Borrowers can no longer apply for a PPP loan.


What is a Paycheck Protection Program loan, and who qualifies?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act has created the Paycheck Protection Program (PPP), an expansion of SBA’s 7(a) loan program for providing financial assistance to small businesses.


Businesses with fewer than 500 employees — including sole proprietors, independent contractors, and other self-employed individuals — all qualify for PPP loans. Since most real estate agents are independent contractors, they are likely to qualify for PPP loans.


Borrowers are required to make a good faith certification that they have been affected by COVID-19 and will use funds to maintain payroll and to cover other debt obligations.


How much money can I borrow with a PPP loan?

SBA will loan borrowers up to $10 million. The actual loan size independent contractors receive will be determined by a formula based on average total monthly net profit over the prior year. Because an independent contractor without any employees can only use $100,000 of net profit to calculate their loan eligibility, the maximum loan an independent contractor without employees can qualify for is $20,833.33.

Loan Terms

Note: The information in this section is included solely for reference purposes. Borrowers can no longer apply for a PPP loan.

What can I use the PPP loan proceeds for?

Once received, the loans may be used by borrowers for payroll costs (including paid sick leave), employee salaries, rent expenses, mortgage expenses, utility expenses, insurance premiums and other debt obligations during the covered loan period. “Payroll costs,” as defined in the CARES Act and SBA guidance, includes any income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation. The SBA refers to this as “owner income replacement,” and it means that an agent who is having difficulty earning commissions on real estate sales due to the COVID-19 pandemic can use the PPP loan proceeds as a substitute for the compensation the agent would normally receive from commissions. The borrower can spend the “owner income replacement” portion of the PPP loan on anything the borrower chooses. (Note: Sick leave tax credits under the Families First Coronavirus Relief Act are not included as “payroll costs” that can be paid with a PPP loan. C.A.R.’s Guidance for Employers regarding the COVID-19 situation provides more information on the FFRCA sick leave tax credits.)


What are the benefits of a PPP loan?

PPP loans are offered on highly favorable terms for borrowers: They are forgivable, they are guaranteed by the government, and payments are deferred. Additionally, no collateral is required to obtain a loan, and there is no personal guarantee requirement.


“Loan forgiveness” means that you are not required to repay your loan. More information about PPP loan forgiveness can be found in the "Loan Forgiveness” section of the FAQs.


“Government guarantee” of a loan means that the government assumes the debt obligation for the loan if the borrower defaults. A government guarantees reduces the risk to the borrower. PPP loans are 100% guaranteed by the government through December 31, 2020. After that, PPP loans are 75% guaranteed for loans exceeding $150,000 and 85% guaranteed for loans equal to or less than $150,000. PPP loans will have a 1.00% fixed interest rate.

“Payment deferment” means that you are not required to immediately begin making payments to the lender.

What are the PPP loan terms for any amounts that are not forgiven?

Any unforgiven amounts will be considered loans with the following terms:

  • A 1.00% interest rate

  • Payment deferment until: (a) whenever the amount of loan forgiveness is remitted to the lender; or (b) 10 months after the applicable forgiveness covered period if a borrower does not apply for forgiveness during that 10‑month period.

  •  A default loan term of 2 years for loans dispersed prior to the enactment of the PPP Flexibility Act, and 5 years for loans dispersed after the enactment of the PPP Flexibility Act.  However, lenders and borrowers can mutually agree to modify the maturity terms of a PPP loan.

Application Process

The deadline to apply for a PPP loan was August 8, 2020. Borrowers can no longer apply for a PPP loan.


How long will it take for me to get a PPP loan after I apply?

According to the Wall Street Journal, it usually takes SBA around one month to process a 7(a) loan. However, government officials have stated that the PPP process will be significantly expedited. According to the Department of the Treasury, the lender must make the first disbursement of a PPP loan no later than ten calendar days from the date of loan approval.


Do I need to report my receipt of PPP loan proceeds to the EDD if I am receiving PUA or UI benefits? 

There is currently no official guidance from the EDD as to whether PPP loan proceeds need to be reported as income when you are certifying for PUA or UI.  However, EDD suggests it is “safer” to do so. Members should expect that reporting PPP loan proceeds will reduce benefits for those weeks. If a member doesn’t report loan proceeds and they are eventually determined to be reportable income, EDD may seek to recover amounts paid plus penalties. Members electing to report PPP loan proceeds to EDD should do so over 8 weeks following when the loan was disbursed. We will provide additional information and guidance as it becomes available.

Loan Forgiveness

Head to the COVID Legal Documents page on car.org for access to: 

  • Step-by-Step Guide to PPP Loan Forgiveness for Borrowers With Employees

  • Step-by-Step Guide to PPP Loan Forgiveness for Borrowers Without Employees

How will I be able to obtain forgiveness for my PPP loan?

On October 8, the SBA posted a simpler loan forgiveness application for PPP loans of $50,000 or less. Click here to view the simpler loan forgiveness application. All independent contractors and sole proprietors without employees will be able to use this short forgiveness application, since their loans were capped at $20,833.

To apply for forgiveness of your PPP loan, you must complete the application and submit it to your lender. Check with your lender to determine if you will be required to submit a paper version of the application or if the lender will be offering an electronic application. Your lender may have additional instructions for submitting the PPP loan forgiveness Application or may require you to submit additional documentation.


When do I have to begin and end using PPP loan proceeds to qualify for forgiveness?

A borrower is eligible for loan forgiveness for amounts the borrower spends during a 24-week period (the “Covered Period”) which begins on the date the lender makes the first disbursement of the PPP loan to the borrower. The “Covered Period” cannot extend beyond December 31, 2020.

You will determine the length of the Covered Period for your loan when you fill out the PPP loan forgiveness application. You do not need to take any action related to this decision prior to filling out the loan forgiveness application.

When can I submit my loan forgiveness application?

A borrower may submit a loan forgiveness application any time on or before the maturity date of the loan, including before the end of the Covered Period, if the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness.

What expenses can I spend the PPP loan proceeds on if I want the loan to be forgiven?


At least 60% percent of the PPP loan must be spent on “payroll costs” in order for the loan to be fully forgiven. The SBA is stating that PPP loan forgiveness for “payroll costs” for independent contractors is limited to “owner income replacement,” i.e., a proportionate share of the borrower’s 2019 net profit, as reflected in the individual’s 2019 Form 1040 Schedule C. The SBA has clarified that, pursuant to the PPP Flexibility Act, borrowers can now attribute up to 2.5 times their 2019 IRS Form 1040 Schedule C average monthly net profit as “owner income replacement.” Since this amount is equivalent to the maximum PPP loan size for borrowers without employees, these borrowers will now be able to classify 100% of their PPP loan proceeds as forgivable “payroll costs.” This means independent contractors will be able to get their PPP loans fully forgiven simply by filling out and submitting the short PPP loan forgiveness application to their lender.

No additional forgiveness is provided for retirement or health insurance contributions for self-employed individuals, since such expenses may be paid out of their net self-employment income.

For the loan to be fully forgivable, any PPP loan proceeds that are not spent on payroll costs must be spent on certain non-payroll costs: namely, mortgage interest payments, rent, and utilities. However, keep in mind that pursuant to the PPP Flexibility Act, all loan proceeds for borrowers without employees can now be attributed as “owner income replacement,” and there is no need to attribute any of the loan proceeds to the non-payroll costs category.

Do I need to submit any additional supporting documentation with my loan forgiveness application?

For an independent contractor’s “owner income replacement,” the 2019 Form 1040 Schedule C that was provided by the applicant at the time of the PPP loan application must be used to determine the amount of net profit allocated to the borrower for the Covered Period. Since the form is already provided by the borrower at the time the PPP application is submitted, no additional supporting documentation will need to be submitted by an independent contractor to obtain forgiveness. Additionally, there is no requirement that a borrower must pay themselves in equal weekly installments to obtain loan forgiveness. There is nothing preventing a borrower from spending all PPP loan proceeds immediately upon receipt.


Are “desk fees” that an agent pays to their firm an eligible non-payroll rent expense?

The answer is likely “no,” unless the agreement between the agent and the firm regarding desk fees is written as a leasing agreement.


Do I need to submit any additional supporting documentation with my loan forgiveness application?

For an independent contractor’s “owner income replacement,” the 2019 Form 1040 Schedule C that was provided by the applicant at the time of the PPP loan application must be used to determine the amount of net profit allocated to the borrower for the covered period. Since the form is already provided by the borrower at the time the PPP application is submitted, no additional documentation will need to be submitted by the borrower to obtain  forgiveness for the portion of the loan used by the independent contractor as “owner income replacement.”

If my PPP loan is forgiven, will I still be required to pay interest?

If the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued.


I think my lender allowed my loan amount to be too high.  How will this affect forgiveness?

If your loan was too high (for example, if you received more than $20,833 despite not having any employees), then it might not be possible to obtain full forgiveness. The best option is to contact the lender to arrange returning any portion of the loan in excess of what can be forgiven.


I’m an independent contractor without employees but indicated on my PPP application that I have 1 employee (myself). Will this affect my loan forgiveness?

As long as you did not receive a larger PPP loan than you are eligible for, this should not have any impact on loan forgiveness.

When will I know if my PPP loan is forgiven?

Lenders are required to issue decisions on borrowers' forgiveness applications to the SBA within 60 days after receiving them. A borrower may request that the SBA review the lender’s decision regarding forgiveness of the loan in the event that the lender determines that the borrower is not eligible for forgiveness. If the lender determines that the borrower is entitled to forgiveness of some or all of the loan amount, the lender must request payment from SBA at the time the lender issues its decision. SBA will, subject to any SBA review of the loan or loan application, remit the appropriate forgiveness amount to the lender, plus any interest accrued through the date of payment, not later than 90 days after the lender issues its decision to SBA. If SBA determines in the course of its review that the borrower was ineligible for the PPP loan based on the provisions of the CARES Act, SBA rules or guidance available at the time of the borrower’s loan application, the loan will not be eligible for loan forgiveness. The lender is responsible for notifying the borrower of the forgiveness amount after the SBA makes its decision.

What happens if any portion of my PPP loan is not forgiven?

The remainder of the loan that is not forgiven (if any) will operate according to the loan terms described in the “Loan Terms” section above.


Will I need to pay income tax on forgiven PPP loan proceeds?

Any forgiven PPP loan proceeds do not need to be reported as gross income by the borrower for federal and state income taxes. However, any expenses paid for with forgiven PPP loan funds will not be deductible from your federal and state income taxes.  You should consult with your tax advisor to see how PPP loan forgiveness may affect you.



What is an Economic Injury Disaster Loan, and who qualifies?

Economic Injury Disaster Loans (EIDLs) are targeted, low-interest loans to small businesses that have been severely impacted by the coronavirus. They are currently available to small businesses with fewer than 500 employees, including sole proprietors, independent contractors and other self-employed individuals. Because most agents operate as independent contractors, agents can qualify for EIDLs.


Independent contractors who have experienced “substantial economic injury” are eligible for an EIDL. “Substantial economic injury” means the contractor is unable to meet their obligations and pay their ordinary and necessary operating expenses.


I heard that the SBA was offering EIDL emergency grants of $1,000 to independent contractors that did not need to be repaid. Are these grants still available?

No. The appropriated funds for the EIDL emergency grant program ran out as of July 11, 2020.


How much money can I receive for the full EIDL loan?

The full amount of the loan can be up to $150,000, with interest rates of 3.75% for contractors. You cannot request the specific amount of the loan -  instead, the SBA determines how much you can borrow using a formula intended to approximate six months of your operating expenses. 

Keep in mind that the EIDL loan is not forgivable. Repayment plans are available — up to 30 years — as determined on a case-by-case basis.

Loan Terms

What can I use the EIDL funds for?

When applying for an EIDL loan, the applicant must certify that the emergency grant funds will be used to provide paid sick leave to employees unable to work due to the direct effect of the COVID–19 pandemic, maintain payroll to retain employees during business disruptions or substantial slowdowns, meet increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains, make rent or mortgage payments, and repay obligations that cannot be met due to revenue losses. The full EIDL loan proceeds may be used for working capital purposes, including payments of fixed debts, payroll, and accounts payable. They may not be used to refinance long term debt.


Are EIDL emergency grants taxable?

Until the IRS provides guidance on this question, the answer is unclear.


Application Process


Step-by-step guide on applying for an EIDL

According to the SBA website, the SBA is not currently accepting new EIDL applications (except for agricultural businesses) because it is still busy processing the applications submitted before the program’s funding ran out. We will update this heading if the SBA begins accepting new applications again.


Where can I apply for an EIDL, and what information do I need?

A streamlined online application for EIDL loans has been made available by SBA at the following link: https://covid19relief.sba.gov/


You will need to provide the following information as part of the application process:

  • General information about the business, including EIN (or SSN for a sole proprietorship)

  • Gross revenues for the 12 months prior to the date of the disaster (which SBA designates as Jan. 31, 2020)

  • Cost of goods sold for the 12 months prior to the date of the disaster

  • Personal and contact information for business owners

  • Information about where to send funds (bank name, account number, and routing number)


How long will it take for me to get an EIDL after I apply?

According to the New York Times, it typically takes one to two weeks for the SBA to make a decision on an application, and up to a week after that for the full loan check to be disbursed. Because of the current application backlog, application approvals are likely to be significantly delayed.


Where can I find more information about EIDLs?

The SBA has an online guide, which is available here:



What is an SBA Express Bridge Loan, and who qualifies?

The Express Bridge Loan (EBL) program authorizes SBA express lenders to provide expedited guaranteed bridge loan financing on an emergency basis for disaster-related purposes to small businesses (including sole proprietors, independent contractors and other self-employed individuals) while those small businesses apply for and await long-term financing. Effective March 25, 2020, SBA expanded the program to apply nationwide. Independent contractors who have been adversely impacted by the COVID-19 emergency are eligible. The contractor must have been engaging in business when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements.


SBA express lenders are only allowed to make EBL loans to eligible borrowers with which the lender had an existing banking relationship on or before the date of the applicable disaster. Check with your bank to determine if it is currently offering EBLs and to see if you qualify. Applying for an EBL will be done through your lender.


How much money can I borrow with an EBL, and what are the terms of the loan?

You can borrow up to $25,000, which can be used for “disaster-related purposes” to support the survival and/or reopening of your business. The maximum EBL loan term is 7 years. The lender may require the EBL borrower to pay the loan, in part or in full, if the borrower is approved for long-term disaster financing (such as an EIDL) that allows loan proceeds to be used for EBL loan reimbursement.


How long will it take for me to get an EBL after I apply?

Because an EBL loan is a bridge loan, first disbursement of the EBL loan must occur within 45 days of the lender’s receipt of an SBA loan number. If the first disbursement is not made within 90 days from receipt of an SBA loan number, the EBL loan will be canceled.


Where can I find more information about EBLs?

SBA’s EBL program guide is available here:



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