Cash payments, expanded unemployment for independent contractors and loans for small businesses. What does it all mean?

The U.S. Senate on Wednesday evening passed a $2 trillion economic stimulus package that appears to give freelance and gig economy workers — including real estate agents — access to unemployment benefits at a crucial time when many real estate markets are frozen.

The 880-page bill is massive and includes a number of different components — like certain restrictions for large corporations and Trump-owned businesses — but for real estate agents in markets where real estate activity is essentially banned, the bill could provide immediate relief.

The National Association of Realtors (NAR), which has created a regularly updated guide to navigating the global pandemic, was among the groups to lobby to include independent contractors in the expanded unemployment provisions.

Direct payments of $1,200

The Senate’s plan includes $1,200 in a one-time, direct payment for individuals and $2,400 for married couples, with $500 per child. That full amount is available for individuals making $75,000 or less in gross income and couples pulling in less than $150,000. The payments would phase out, becoming not available to individuals making $99,000 and couples making $198,000.

Nicole Kaeding, the vice president of policy promotion and economist for the National Taxpayers Union, broke down specifics on her Twitter account, and said, “checks or direct deposit will be issued by the Treasury Secretary ASAP, probably three weeks for direct deposit and 6-8 for mail,” meaning, if you filed taxes and gave the government your direct deposit information, it would come sooner.

Kaeding has an entire Twitter thread breaking down provisions of the bill:

Alternatively, the Internal Revenue Service (IRS) has your direct deposit information if you collect Social Security or Social Security Disability.

The IRS will determine initially eligibility based on 2019 tax filings, or 2018 if you haven’t filed yet for this year. If you haven’t filed in recent years, it may impact your eligibility to receive the check. Ultimately, the amount you receive will be based on adjusted gross 2020 income, according to Kaeding.

Expanded unemployment insurance

Unemployment insurance is set to include gig workers and freelance workers — which includes independent contractor real estate agents — for the first time. The expanded benefits — which are being upped to $600 weekly — are intended to essentially “make whole” the gap between state unemployment insurance and the average worker’s $1,000 weekly salary.

Real estate agents who have been partially or fully unemployed and are unable to work due to COVID-19 will be eligible for expanded benefits. The exact amount is dependent on each state’s individual formula, based on the weekly compensation that individuals would have made, based on the most recent tax year.

Even part-time workers, freelance workers or independent contractors in states that don’t provide unemployment insurance to whose workers will now be eligible to collect unemployment insurance. The extra $600 is set to last four months, while regular state insurance is typically 26 weeks. The bill also extends that state insurance limit by 13 weeks.

The expanded unemployment insurance is directly for individuals whose work has been disrupted by coronavirus, so states where real estate activity has essentially been halted like New York or California.

Small business loans provide payroll tax relief

Many real estate brokerages are operated as small businesses, with administrative staff on the payroll and in markets where real estate activity is suspended. A provision of the stimulus package will allow those small businesses with less than 500 employees — including real estate brokerages — to defer payroll taxes so they can continue to employ individuals during the health crisis and be eligible for loans.

Companies can delay paying payroll taxes for 2020 and pay those taxes over the next two years, according to Kaeding.

Those brokerages are eligible for the Small Business Administration’s Payroll Protection Program and Economic Injury Disaster Loan, according to a source at NAR. The businesses can apply for loans covering payroll, rent, mortgage interest and utilities through June 30, 2020, with loan amounts dependent on salary expenditures, up to a total of $10 million.

The loans are also available to self-employed and independent contractors. A portion of the loan, dependent on payroll amount, is eligible for forgiveness. Compensation to commission-based employees is included in that calculation.

Amanda Ballantyne, executive director of the Main Street Alliance, a coalition of small business owners, praised some aspects of the bill, but criticized for not going far enough.

“The best way to support the economy during this crisis is to keep workers getting paychecks, and keep small businesses solvent,” Ballantyne said. “We hear every day from small business owners who have been forced to lay off employees, and have been waiting to hear what support was coming — and if they will get a lifeline or will need to permanently close their doors. And for them, this package has needed elements — but in the wrong order.”

Will the bill impact the housing market?

Many in the industry are either in markets where homes are still being bought and sold, or are looking ahead to what the industry might look like when the pandemic passes, whenever that may be. Redfin lead economist Taylor Marr believes the bill puts homeowners in a better position to weather the storm than they were during the last downturn.

“During the 2008 recession, many Americans had little-to-no home equity and could not afford to pay their mortgages, causing a flood of supply in the housing market as people were forced to abandon their homes,” Marr said. “That influx of supply, when paired with sluggish demand, led to a dramatic drop in home prices.”

“In contrast, home equity today is at an all-time record, the housing market started the year off strong, and homeowners have much higher credit scores than before, meaning they’re less likely to default on payments,” Marr added. “Additionally, the government has instituted a moratorium on foreclosures and is weighing a stimulus package that could help homeowners cover their mortgages.”

The bill still has to pass the U.S. House of Representatives and be signed by President Donald Trump.

Email Patrick Kearns

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