On Monday, April 27, the US government resumed disbursing billions of dollars in low-interest loans to businesses with up to 500 employees. This is the second stimulus bill that has begun to provide relief to businesses under the Payment Protection Program (PPP). This recovery plan should run out quickly, so you need to be able to understand what you need to do and how it works if you hope to use it.
Understanding this second round of government assistance can be tricky, which is why we had Mark Kohler in our Secrets of Top Selling Agents webinar. Kohler, a notable CPA and attorney, provided viewers with an understanding of how the stimulus package works and how it will provide assistance to real estate agents.
What is the second stimulus package?
The second stimulus package comes as businesses struggle to ensure their employees are paid during this time. This bill, authorized on April 24, will provide an additional $310 billion in funds for the program and will also provide loans at 1% interest to businesses with fewer than 500 employees.
Strategies that affect everyone
1. Dunning checks or bank transfers. You may have already received a stimulus deposit in your bank account. However, many Americans have yet to receive their stimulus checks because the checks were only sent out recently.
2. SBA loan forbearance. You or the clients you serve may have a Small Business Administration 504 (SBA) loan in place. According to Kohler, if you have one of these loans, the bank that gave you the SBA loan will begin making payments for you for six months. This is not part of the payment protection program, but it is an option for those who have one of these loans. What you need to know is that the bank makes payments on loan principal and interest during this period and there are no tax implications after the six month period ends. You or your customers don’t need to apply, but Kohler suggested contacting your bank to make sure the bank is making these payments, since they started on April 1.
3. Pension Plan Provisions. This provision can allow you or your clients to withdraw money from a retirement account and defer taxes for 3 years or put the money back in the account and pay no tax or penalty. . Although not the best option, it can provide emergency financial assistance. You can withdraw up to $100,000. Kohler suggested taking money out of your IRA and moving it into your 401K as needed. Then you can borrow and put the money back into your 401K or IRA over a period of five years. This can be done if you are still employed. You can only borrow against your 401K during this time, whether it’s a personal 401K or a 401K created by your company.
Should I file an unemployment claim?
Under the Payment Protection Program (PPP), you have the option of filing for unemployment and collecting benefits. Kohler says if you’re not currently working and have no business or closings, this might be the best bet for you. You have the option of receiving up to $1,000 per week or up to $4,000 per month for up to three months.
Sounds good, but remember that to qualify for unemployment you have to be fully unemployed. If your real estate business is suffering, but your 9-5 job is still paying you, you are not unemployed and will not qualify for unemployment benefits.
Kohler suggested that the best thing you can do to qualify for unemployment benefits is to step back from your business, continue to network, but stop all business for three months until the things go back to normal so you can collect any benefits you may need. It doesn’t mean you’re a failure, but it does mean you take a step back to orient yourself, train, and regroup when things return to normal.
Options for unemployment under the PPP
You should take advantage of every opportunity available to you when it comes to qualifying for unemployment under the PPP. There are two things you need to know about unemployment options under the PPP. What Kohler describes as “The Fork in the Road”.
1. Unemployment Under the PPP. Most REALTORS® will receive between $8,000 and $20,000 with a cap of $20,800. You can apply for a 1% loan repayable over 24 months from a bank or collect unemployment benefits, FMLA and emergency paid sick leave. If you are filing under the PPP, you subtract what you received from the Economic Disaster Loan (EIDL).
2. Employee Retention Tax Credit (ERTC). If you are a broker, you can receive $5,000 per employee you support. If you choose to receive the ERTC, you cannot do the PPP and the employee must be an official W-2 receiving employee, not a 1099. You may also qualify for a tax filing deferral on salaries for up to two years.
Understanding the new recovery plan can be difficult, especially when it comes to managing a business in these uncertain times. Mark Kohler will be doing a live Q&A on our Facebook page on Wednesday, May 6 at 1:00 PM EDT, click here to RSVP, please keep in mind that to attend this event you must join the Secrets of Top Facebook group Selling Agents.
Marc Mathis is Vice President of Sales for Homes.com. For more information, please visit marketing.homes.com.