FAQs: Small Business Administration (SBA) Loans for Agents

Updated on May 26, 2020

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See Also: FAQ on Pandemic Unemployment Assistance (PUA)

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.


May 26 Updates:


The SBA released an application form for PPP loan forgiveness on Friday, May 15. The application form is available here: PPP Loan Forgiveness Application.


The FAQs have been updated to include more information about PPP loan forgiveness based on the information included in the application. The SBA has promised to publish new regulations that further explain the terms of PPP loan forgiveness. In addition, Congress is considering a bipartisan bill that would substantially change the terms of PPP loan forgiveness. The bill could potentially be voted on and passed as soon as next week. C.A.R. will provide updates to this FAQ when new information becomes available.


Additionally, the FAQs have been reorganized, and a new Table of Contents has been added.




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 CARES Act makes the following options available to REALTORS®:


  • Paycheck Protection Program Loans (PPP)

  • Economic Injury Disaster Loans (EIDL)

  • SBA Express Bridge Loans (EBL)

Selecting the Best Loan


Which of the SBA loans should I apply for?

As described below, Paycheck Protection Program (PPP) loans are provided on very favorable terms, and they may be the best option for most agents. If you have not yet applied for an Economic Injury Disaster Loan (EIDL), it is likely too late since the SBA is still working on processing a backlog of millions of previously submitted applications and may not be accepting any more new applications. 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, get 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.



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.


I heard that my broker is applying for a PPP loan. Can I, as an independent contractor, also apply for a PPP loan?

Yes. The SBA determined that a broker will not be able to use PPP loan proceeds to compensate independent contractors. However, independent contractor agents are eligible to apply for PPP loans on their own.


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. Please note that you may qualify for a larger loan than the amount that will be forgiven under current SBA guidance. For the formula to calculate your maximum PPP loan, please refer to the “Application Process” section below. 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 (but even this amount is not fully forgivable for an independent contractor without employees – see the “Loan Forgiveness Process” section below).

Loan Terms

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. Borrowers will receive complete payment deferment for PPP loans for 6 months; however, interest will continue to accrue over this period. The loan will be due 2 years after its origination.


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

Any unforgiven amounts will be considered loans with a 1.00% interest rate, payment deferment for 6 months, and a loan term of 2 years. These loan terms are set by the SBA and are not negotiable with the lender.

Application Process

Where can I apply for a PPP loan?

The United States Small Business Administration (SBA) delegates the authority to make PPP loans to numerous lenders throughout the country. These lenders will be handling the PPP application process. Because PPP is an expansion of the already-existent 7(a) program, the financial institutions that offer 7(a) loans will be offering PPP loans as well. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks. All of the largest banks (such as JPMorgan Chase and Bank of America) are offering PPP loans.


If you choose to apply for assistance, work with your lender to apply as soon as possible. The SBA has released a sample application form if you want to see the information that will be requested from you when you apply: https://www.sba.gov/document/sba-form--paycheck-protection-program-ppp-sample-application-form. However, please contact your lender to apply for a PPP loan and to obtain the real application form. You cannot apply for PPP loans on the SBA website.  The deadline to apply for a PPP loan is June 30th, 2020.


How do agents calculate their maximum PPP loan amount?

Formula for agents to determine eligible loan amount:

  • Step 1: Find your 2019 IRS Form 1040 Schedule C line 31 net profit amount (if you have not yet filed a 2019 return, fill it out and compute the value). If this amount is over $100,000, reduce it to $100,000. If this amount is zero or less, you are not eligible for a PPP loan.

  • Step 2: Calculate the average monthly net profit amount (divide the amount from Step 1 by 12).

  • Step 3: Multiply the average monthly net profit amount from Step 2 by 2.5.  Thus, if your Schedule C net profit amount is $100,000 or greater, you qualify for the maximum loan available to an independent contractor without employees, which is $20,833.33.  ($100,000 ÷ 12 * 2.5)

  • If you want 100% forgiveness for your PPP loan, you may need to limit your loan request to 8 times your average weekly net profit rather than 2.5 times your average monthly net profit. Any loan proceeds above 8 times average weekly net profit may not be forgivable and may be treated as a conventional loan which must be repaid. Your average weekly net profit is determined as your 2019 IRS Form 1040 Schedule C line 31 net profit amount divided by 52.

  • Step 4: Add the outstanding amount of any Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020 that you seek to refinance, less the amount of any advance under an EIDL COVID-19 loan (because it does not have to be repaid).


What forms do agents need to provide to the lender to apply for a PPP loan?

Regardless of whether you have filed a 2019 tax return with the IRS, you must provide the 2019 Form 1040 Schedule C with your PPP loan application to substantiate the applied-for PPP loan amount. You must also provide a 2019 IRS Form 1099-MISC detailing nonemployee compensation received (box 7), or an invoice, bank statement, or book of record that establishes you are self-employed. Finally, you must also provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.


Can I apply for a PPP loan if I am a new agent that did not have any income during 2019?

Notably, new agents who were in business as of February 15, 2020 but not in business during 2019 are technically eligible to receive a PPP loan if they received net profit during the first 2 months of 2020; however, the SBA has not explained how such applicants can apply at this time. The SBA says it will issue additional guidance for those individuals soon.


I tried to apply for a PPP loan at my bank, but the bank refused to consider my application or rejected it. Do I have any other options?

Many major lenders are currently only assisting independent contractors who already have a business checking account with them. If you only have a personal checking account, these lenders will still not accept your PPP application. However, there are some PPP lenders, such as community banks, that are willing to take new customers. If you need assistance finding a PPP lender, SBA has created a “Lender Match” tool that allows you to search for lenders based on your Zip Code: https://www.sba.gov/paycheckprotection/find.


Additionally, many financial technology (“FinTech”) companies have started processing PPP loan applications. Before you apply for a PPP loan, it is important to review the options with your CPA or financial advisor. If you are considering a FinTech lender, you will want to determine if the FinTech company is actually submitting applications to a bank or to the SBA, not just collecting your contact information for marketing purposes. Also, you will want to determine if the lender has a specific timeline indicated in its written materials that promises to provide a response when you submit an application request.


Below are some resources and links that you can use to find a PPP lender. Please be advised that you are not required to seek services from any of the companies suggested. These companies are not in any way reviewed, supported or endorsed by C.A.R.


FinTech Companies Providing PPP Loans**


$60 billion of PPP funding has been set aside for community banks, credit unions, and community development financial institutions. However, be aware that many of these lenders will only be accepting applications from customers that have a pre-existing relationship with the lender, and/or the lender will be prioritizing applications from those customers. If you are considering applying for a PPP loan with one of these smaller lenders, here are some resources to locate a lender in your area.


Community Banks, Credit Unions and Community Development Financial Institutions**

** C.A.R. is not making any representations or warranties regarding the quality of their services. C.A.R. has not paid and will not pay the companies any compensation whatsoever for the level of service they have committed to providing. The companies will not pay C.A.R. or its members any referral fee or any other thing of value for being on this list. C.A.R. disclaims any and all liability related to the services provided by the companies on this list. Please be advised the list below may be amended at any time without notice


I need help completing my PPP application. What should I do?

If you need assistance completing the PPP application, C.A.R. recommends seeking a CPA to provide that assistance. Pursuant to guidance from the Department of the Treasury, CPAs are not supposed to charge fees for assistance in preparation of a PPP loan application. However, keep in mind that CPAs are allowed to charge fees for advisory services, such as helping you decide which tax relief program is the best fit for your needs and circumstances.


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 guidance from the EDD as to whether PPP loan proceeds need to be reported as income when you are certifying for PUA or UI. We will provide additional information and guidance as it becomes available.

Loan Forgiveness

NOTE: C.A.R. has released step-by-step guides for completing the PPP Loan Forgiveness Application. Below are the links to both guides:

Forgiveness for borrowers without employees

Forgiveness for borrowers with employees

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

The SBA released the PPP loan forgiveness application form on May 15, 2020. The application form is available here: PPP Loan Forgiveness Application.


To apply for forgiveness of your PPP loan, you must complete the application and submit it to your lender. You should not complete and return the application until, at the earliest, 60 days have passed since you received the PPP funds. 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 an eight-week period which begins on the date the lender makes the first disbursement of the PPP loan to the borrower.


(Note: Congress is considering passing a law that will extend the length of the period during which a borrower can spend PPP loan proceeds and have the loan forgiven. If this law passes, C.A.R. will update the FAQ and the Step-by-Step guides accordingly.)


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

At least 75% 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 eight-week share of the borrower’s 2019 net profit, as reflected in the individual’s 2019 Form 1040 Schedule C. If you do the math, you will note that 8 times average 2019 weekly net profit is 73.8% of the maximum PPP loan amount. Thus, there is a small amount of the PPP maximum loan that cannot be forgiven for independent contractors, regardless of the actions you take to document the use of the loan proceeds. This seems like an oversight by the SBA, but it is the inevitable result of the regulations that are currently in effect.


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 forgivable, the remainder of PPP loan proceeds must be spent on certain non-payroll costs: namely, mortgage interest payments, rent, and utilities.

  • Eligible mortgage interest costs include payments for any indebtedness or debt instrument incurred in the ordinary course of business that is a liability of the borrower, is a mortgage on real or personal property, and was incurred before February 15, 2020 (but not any prepayment or payment of principal).

  • Eligible rent costs include payments for rent obligation on real or personal property under a leasing agreement in force before February 15, 2020.

  • Eligible utility costs include payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

Additionally, per the SBA’s Interim Final Rule from April 14, 2020, you must have claimed or been able to claim these expenses as deductible on your 2019 IRS Form 1040 Schedule C in order for them to be forgivable when paid with PPP loan proceeds.


*(NOTE: Congress is considering passing a law that will reduce the percentage of PPP loan proceeds that need to be spent on payroll costs to have the loan fully forgiven. If this law passes, C.A.R. will update the FAQs and the Step-by-Step guides accordingly.)


Can an independent contractor include a prorated portion of their home mortgage interest payments, home rent payments, and/or home utility bills as eligible non-payroll expenses if they have a home office and deduct these expenses on their IRS Form 1040 Schedule C?

At this point, the answer is unclear. Current SBA regulations do not explain whether home office expenses are eligible for forgiveness, and third-party commentators disagree. For now, C.A.R. recommends checking with your lender to see if the lender is willing to provide loan forgiveness in this circumstance. C.A.R. will update these FAQs if SBA provides more guidance on this issue.


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 eight-week 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.”


For non-payroll costs, you will be required to submit additional documentation to obtain loan forgiveness.

  • For mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying eligible payments from the covered period. Alternatively, you can submit lender account statements from February 2020 and the months of the Covered Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.

  • For rent or lease payments: Copy of current lease agreement and receipts of cancelled checks verifying eligible payments from the Covered Period. Alternatively, you can submit lessor account statements from February 2020 and from the Covered Period through one month after the end of the Covered Period verifying eligible payments.

  • For utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts, cancelled checks or account statements verifying those eligible payments.


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 in the 8-week covered period.


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. 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 loan amounts under the SBA 7(a) PPP program will not count as income for the borrower for tax purposes. However, pursuant to a notice from the IRS, any expenses paid for with forgiven PPP loan funds will not be deductible from your 2020 federal income taxes.



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.


How much money can I receive from an EIDL emergency grant?

The CARES Act establishes an emergency grant to allow an eligible applicant who has applied for an EIDL to request an advance on that loan of no more than $10,000. SBA has started informing applicants that the amount of an EIDL emergency grant will be determined by the number of the applicant’s pre-disaster (i.e., as of January 31, 2020) employees. The EIDL emergency grant will be calculated as follows: $1,000 per employee up to a maximum of $10,000. This means independent contractors and sole proprietors without employees will only be eligible to receive an EIDL emergency grant of $1,000. An applicant would not be required to repay the advance payment, even if subsequently denied an EIDL loan. According to the CARES Act, SBA is supposed to distribute the emergency grant within three days of its receipt of the application. In practice, it is currently taking many weeks for the SBA to begin reviewing an EIDL application due to the massive number of submissions. Based on C.A.R.’s current information, applicants should not expect to receive an emergency grant within 3 days of sending in the application. Other resources may refer to an EIDL emergency grant as (1) an EIDLA; (2) an Emergency Economic Injury Grant; or (3) an EIDL Grant.


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. The New York Times reports that the SBA has been sending a message to recent EIDL applicants stating: “[T]he SBA will make initial loan disbursements for two months of working capital up to a maximum of $15,000 per applicant.” This message does not explain whether borrowers will ultimately be getting more money disbursed at a later time. The SBA has not released any official statement about this message or the supposed $15,000 initial disbursement cap, but C.A.R. will provide updates as soon as more information becomes available.


Keep in mind that although the emergency grant does not need to be repaid, the remainder of 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


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/ [Note: This link is not currently functional because SBA is not accepting new EIDL applications for non-agricultural businesses.]

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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