Loan forgiveness "is what the SBA and Congress intended to happen"
Real estate agents have received $3.9 billion from pandemic relief loans, but $3.1 billion of it has since been forgiven by the federal government.
The Paycheck Protection Program (PPP) is an SBA-backed loan that helps businesses keep their workforce employed during the pandemic. Over 300,000 loans were authorized to real estate entities with one employee, NBC News reported, with each business taking home an average of $13,000 in relief loans. However, there are also more than 100 of them that received a generous sum at $90,000 each.
Following the relief’s end on May 31, 2021, was the announcement that existing borrowers were welcome to apply for loan forgiveness. Since then, around 83% of the loans in the $789 billion program have been forgiven, translating to around $3.1 billion in funds.
Unlike other less fortunate industries, the real estate market saw an unexpected boom during the pandemic. According to Real Trends Consulting, the average US commission for real estate sales is 2.5% of the sale price, and the agent usually gets 85% of that. NBC News reported the nationwide total commission to be around $76.2 billion in 2019, $85.9 billion in 2020 and $98.8 billion in 2021.
In addition, the majority of the PPP loans went to real estate agents in red-hot markets — $3.6 million to real estate entities in Beverly Hills, $4.3 million in El Paso, Texas and $14.9 million to Charlotte, North Carolina.
The PPP intended for loans to be forgiven if the recipient met certain rules, such as spending 60% of the loans on payroll and spending the rest on eligible expenses. Enacted this way, it functioned more like grant program than a relief loan.
Erin Stackley, senior policy representative for commercial issues at the National Association of Realtors, told CBC News that eligible agents who requested loan forgiveness did so in good faith: “[loan forgiveness] is what the SBA and Congress intended to happen.”