Real estate brokers eligible for Stimulus support

Real estate brokers are getting a lifeline from the federal government’s massive stimulus package (Pixabay)

Real estate brokers are typically in the consumer food business, working as independent contractors whose primary source of income is a commission check rather than a salary. In New York alone, there are over 50,000 licensed real estate brokers, the majority of whom only get paid when they close a deal.

In past crises, these workers were typically excluded from government bailouts designed to help companies keep employees on the payroll.

Now, the federal government’s $2 trillion relief package is extending assistance to this typically overlooked segment of the workforce. But there is a question of whether the funds available are sufficient to cover the deluge of layoffs expected amid the widening coronavirus pandemic that has shredded the economy.

“Normally the self-employed or self-employed people can’t take advantage of many of these programs,” said Phillip Schreiber, labor and employment lawyer at Holland & Knight law firm. “At least not in this capacity.” Schreiber noted that Washington lawmakers have moved quickly and forcefully to try to support workers so they are able to get going once the pandemic passes.

“I think that’s why you see this expanding to a group of people who aren’t traditionally covered,” he said.

The CARES (Coronavirus Aid, Relief and Economic Security Act), which President Trump signed into law on Friday, provides employment assistance through the Small Business Administration.

It offers two loan programs for small businesses with 500 or fewer employees.

The larger of the two is known as the SBA 7(a) Payroll Protection Program, which provides a loan of up to $10 million to cover expenses such as payroll, mortgage interest, rent, and utilities for the period from February 15 to June 30.

Individual salary amounts are capped at $100,000. And if the employer keeps payroll expenses at 75% of the previous year’s level, the loans will be forgiven.

A spokesperson for the National Association of Realtors said the program is available to individual brokers, meaning they can take out loans to cover lost commissions as payroll.

“These loans are available to the self-employed/independent contractors, and the repayable payroll amounts include these as well as commission-based employees,” NAR wrote in a note on the package.

The second program is Economic Disaster Loans – known as SBA 7(b)(2) Loans – which provide $10,000 advances on emergency loans that are supposed to be dispersed within three days. . Loans are limited to $2 million.

Combined, however, these programs offer just $359 billion in relief, which may not be enough for the unprecedented number of people expected to lose their jobs across the country.

Economists at the American Enterprise Institute think tank have estimated the need could be more than triple that figure.

“We estimate the replacement cost of 80% of revenue for three months for private sector companies with less than 500 employees, excluding manufacturing, healthcare, education and finance, at $1.2 trillion,” they wrote.

Some of the larger brokerages have already taken steps to cut costs.

Compass last week laid off 15% of its total workforce. These were, however, limited to employees, not agents. Compass has 2,500 employees and 15,500 agents nationwide.

Realogy also temporarily reduced the pay and workweek for a “majority of our employees,” the company disclosed in a regulatory filing last week.

And on Monday, Meridian Capital Group, New York’s busiest debt brokerage firm, laid off a “small number” of support and back-office workers.

Last week, more than 3 million people nationwide applied for unemployment benefits. In New York State, more than 80,500 claims were filed for the week ending March 21.

Schreiber said eligible brokers should apply for the SBA loans as soon as they can.

“As more people sign up, the backlog will grow,” he said. “There are only a limited number of loans that can be processed at a time. This alone suggests that the expectation is probably not ideal.

Contact Rich Bockmann at [email protected] or 908-415-5229

Kristan F. Talley