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In a sea of news about rising COVID-19 cases and sky-high unemployment rates, there, too, are small glimmers of hope: The first shipment of coronavirus vaccines arrived in the U.S. this month, and Congress broke its months-long gridlock to pass an additional round of COVID-19 relief.
The new $900 billion Coronavirus Relief stimulus package, which was passed on Monday, is becoming widely known by Americans for its $600 in direct payments.
But what, if any, relief will it provide for struggling small businesses, such as travel agencies and suppliers?
The bill does hit a number of provisions that were advocated for by various industry groups, including the American Society of Travel Advisors (ASTA), the U.S. Travel Association and the COVID Relief Now Coalition, among others.
Seeing this bill make it across the finish line is a huge relief after months of struggle.
“Seeing this bill make it across the finish line is a huge relief after months of struggle,” said Roger Dow, president and CEO of the U.S. Travel Association. “Leader [Mitch] McConnell, Leader [Chuck] Schumer, Speaker [Nancy] Pelosi and Leader [Kevin] McCarthy all deserve significant praise for seeing this tough effort through to completion. Hopefully now that this challenging legislative step has been overcome, we can head into the next Congress with momentum for further substantive measures to rejuvenate businesses and jobs.”
Although it is significantly smaller than its predecessor (the $2 trillion CARES Act), the newest stimulus package is still impressive in scope.
Here are some highlights of the new bill.
RELATED: The Travel Industry May Not See a Full Recovery Until 2024 — or Later
Extension to Unemployment BenefitsUnemployment benefits for those receiving aid under the CARES Act expired July 31, and expanded eligibility covering the self-employed was set to expire at the end of 2020. However, the new bill will allow unemployed Americans to receive supplemental benefits of $300 per week for 11 weeks, in addition to a $600 direct payment.
Expansion to the Paycheck Protection Program (PPP) The package provides $248 billion to the Paycheck Protection Program (PPP), a CARES Act initiative that was quickly depleted, and extends its deadline to March 31, 2021.
New for this bill, however, is the inclusion of quasi-governmental destination marketing organizations and lobbying groups with fewer than 300 employees (as long as no more than 15% of their activities consist of lobbying, and they have not spent more than $1 million in lobbying in 2019).
At least $35 billion of the PPP’s newly established funds will be set aside for eligible small businesses that have not yet received a loan, in addition to a second round of forgivable low-interest loans for those who previously secured a loan and who experienced a 25% dip in revenue for any quarter of this year (when compared to 2019).
“This expanded eligibility is of great benefit to our members and the industry at large, and critical to our ongoing survival and recovery,” said Terry Dale, president and CEO of the U.S. Tour Operators Association (USTOA), in a statement to members.
RELATED: What the Historic CARES Act Means for Travel Agencies and Advisors
For hotels and other lodging businesses, the PPP loan amount will be 3.5 times the accommodation’s average monthly payroll, a move that Chip Rogers, president and CEO of the American Hotel & Lodging Association, believes “will provide a critical lifeline for hotels and other businesses that have been decimated by the pandemic.”All other applicants will receive loans at 2.5 times their average monthly payroll. Loans are capped at $2 million, and these conditions apply for both first-time and repeat applicants. Publicly traded companies cannot receive PPP loans.
But the fight continues, and will until the travel agency sector is restored to health.
A problem with the CARES Act’s iteration of the PPP included limits on its allocation of funds. Originally, the program only allowed 25% of borrowed funds to be used for non-payroll expenses such as mortgage, rent and utilities. Although at least 60% of the loans must still cover payroll, the new bill expands the list of non-payroll expenses to cover supplies and inventory; software and cloud-based services; uninsured damages from public disturbances in 2020; and personal protective equipment used to protect workers from COVID-19. These expenses will also be tax deductible.
Adjustments to the Economic Industry Disaster Loan (EIDL) ProgramUnder the CARES Act, many small businesses also turned to the Small Business Administration-managed EIDL program for relief. This week’s bill will allocate an additional $40 billion to that program (through Dec. 31, 2021), with an additional $20 billion for employers living in low-income areas who have experienced at least 30% in economic loss. Grants up to $10,000 will be given to such first-time borrowers (or the difference to what they previously received, up to $10,000, if they are repeat applicants).
Amendments to the Employee Retention Tax CreditThe Employee Retention Tax Credit, a quarterly refundable payroll tax credit designed to incentivize businesses to keep employees on their payroll, was established under the CARES Act. Under the newest package, the credit will be extended through July 1, 2021. It will also be increased to 70% of compensation paid to employees (up to $10,000 per quarter, per employee) for businesses experiencing a revenue decline of 20% or more. (Formerly, the credit only covered 50% of compensation, up to $10,000, for a calendar year if the business experienced at least a 50% drop in revenue.)
It also amends the credit to include businesses with up to 500 full-time employees (rather than 100).
More Relief for Airlines and AirportsAn additional $15 billion in funds will extend specifically to U.S. airlines, a move that Nicholas Calio, CEO and president of Airlines for America, says will “protect the jobs of flight attendants, mechanics, pilots, gate agents and others.”
The funds must cover worker payroll and benefits through March 31 and can be used to re-hire workers who were laid off after Sept. 30, 2020, due to the pandemic. An extra $1 billion will be provided for airline contractors.The bill also allots $2 billion for airports, including $1.75 billion in grants that must be used to prevent and prepare for the spread of COVID-19. On-site airport car rental companies, restaurants and shops will also have access to an additional $200 million.
Additional Highlights of the BillExtra provisions will aid in rebooting the struggling tourism industry, such as $15 billion in funding for live venues (such as theaters, museums and performing arts centers); a full deduction for business meals (which was proposed by the travel industry); and $2 billion in assistance to motorcoach and bus operators, along with other transportation providers.
The Industry’s ResponseSince the introduction of the bill, various industry groups have spoken out in support, while also acknowledging a long road ahead.
“This legislation is a lifeline for businesses and workers who have been hanging on by a thread,” said U.S. Travel’s Dow. “More than 4 million travel jobs have been lost this year, and this package includes long-needed provisions to help employers keep their lights on — a second draw on PPP funds for the hardest-hit businesses, eligibility for non-profit destination marketing organizations, assistance to airports and concessionaires as well as airlines, and enhancements to the Employee Retention Tax Credit, among many others.”
However, more work is needed for a full recovery, according to ASTA.
“We welcome the fact that Congress has finally done its job and provided new relief to distressed sectors of the economy, including a number of provisions ASTA and its members have been advocating for since April like the ability for hard-hit companies to apply for an additional PPP loan,” said Zane Kerby, president and CEO of ASTA. “That said, more support for our members beyond this bill will be absolutely needed. Thankfully, this package is widely considered a short-term ‘bridge’ into early 2021, and it is clear that the next Congress will take up additional relief legislation in the first quarter. Something is better than nothing, and we appreciate the breathing room this bill will afford the vast majority of our members. But the fight continues, and will until the travel agency sector is restored to health.”
“While much work remains before the bill is signed into law, and more effort needed in the coming months to restore the travel industry to pre-pandemic heights, we are glad to see this monumental step taken. USTOA looks forward to going further in 2021,” added USTOA’s Dale.
Additional bill highlights, compiled the U.S. Travel Association, can be found here.
The DetailsAirlines for Americawww.airlines.org
American Hotel & Lodging Associationwww.ahla.com
American Society of Travel Advisorswww.asta.org
U.S. Tour Operators Associationwww.ustoa.com
U.S. Travel Associationwww.ustravel.org