These Are the Challenges to Receiving Money From the CARES Act

Now that the CARES Act has been signed into law — and travel advisors have several avenues to apply for relief — Eben Peck, executive vice president of advocacy for American Society of Travel Advisors (ASTA), has turned his attention to the weeks ahead.

Here, he explains the law’s various challenges, how ASTA is working with supplier members and what he sees for the future of the travel industry.

What are ASTA’s plans in the coming weeks to help advisors secure loans under the CARES Act?
We’re working to smooth some of the glitches that are in the “round three” coronavirus bill (the current CARES Act), of which there are many. And then we’re looking forward to round four and keeping in mind that some of the glitches in round three are going to inform what we are going to be asking Congress for in round four. [Editor’s note: The Families First Coronavirus Response Act represents round one of the coronavirus bill, and the Coronavirus Preparedness and Response Supplemental Appropriations encompasses round two.]

There are multiple pots of money that members can apply for, but it’s such a massive bill, and the responsibility has been dumped on the Treasury Department and the Small Business Administration (SBA). They’re doing their best, but they’re struggling. In a typical year, SBA processes some $20 billion worth of loans and loan guarantees. And now, they’ve been asked to do $350 billion basically overnight. So far, the SBA Administrator has tweeted out saying that a total of 17,503 loans have been made, valued at more than $5.4 billion.

In a typical year, SBA processes some $20 billion worth of loans and loan guarantees. And now, they’ve been asked to do $350 billion basically overnight.

What types of problems have advisors been running into when applying for these loans?
The system is stressed, and nothing is running totally smoothly right now. The SBA’s Payroll Protection Program (PPP) doesn’t flow through the SBA; rather, it flows through banks across the country. Some banks were ready, but most were not. The SBA put out the rules on Thursday night (on April 2) for a program that was supposed to launch Friday (April 3). So, banks were in varying degrees of readiness to start processing loan applications.

We’ve had members who have had their applications accepted with no problems, and we’ve had members who say that either the bank is not participating, or not participating yet. We’ve also heard stories of banks only accepting applications from people who have a credit card with them. I predict we are going to be spending a lot of time working through these issues and making sure our members can apply for these loans, which they are eligible for.

What is your advice for those running into delays due to a bank’s lack of preparedness?
We’re asking them to be patient, and to keep looking if one bank is giving you the stiff arm. There are 1,800 banks or so that have the capacity to issue these loans. Just keep trying until you find one.

The fact that some of our members are having success means the system is working — to an extent.

We’re also telling people that Congress is going to come back to this in the next four to six weeks, probably. They’ll either put more money into this, or they’ll change the rules (in round four). 

One of the things we push for, since we have so many independent contractor (IC) members, is that unemployment benefits are open to ICs and self-employed advisors. The guidelines under the CARES Act were generous, but the bad news is that this flows through different states’ unemployment offices. Some are in better shape than others. We’re trying to make sure we have the most up-to-date information about application wait times.

The world came to a shuddering halt. And travelers who were working with a travel advisor had a much better time than those who didn’t. This is something we’ve always talked about, but it’s rarely put to the test like this.

In addition to working with advisors, how are you aiding other member categories during this time, including consortia and suppliers?
We’re working hand and glove with consortia almost on a daily basis. We’re in constant contact with them, and they’re receiving a lot of same questions that we are. We’re sharing resources, and we’re making sure that everybody is on the same page.  

We have supplier members, as well, some of which are big-name companies and some of which are local tourism boards and smaller tour operators. We’ve answered questions about how they can get relief under this bill, since most of these programs are open to any type of business, not just travel advisors. 

Are there any plans for a new marketing initiative to maximize the current goodwill and appreciation for advisors right now? 
Absolutely. The timing is TBD at this point, but we are trying to gather as many stories as we can. These advisors who are no longer getting paid for anything, are spending hours and hours making sure their clients are home safe. It’s a lot of work, and there is extreme stress on the travel system. Once the dust settles a little bit, we’ll have some great stories to tell.

The world came to a shuddering halt. And travelers who were working with a travel advisor had a much better time than those who didn’t. This is something we’ve always talked about, but it’s rarely put to the test like this.

Do you believe that the CARES Act will do enough to protect the travel industry? 
I think the CARES Act will help — and hopefully save — most travel agencies, especially when coupling it with whatever we see in round four of the coronavirus bill. We could see a doubling or a tripling of the amount of loans in the PPP, for example, or we could also see more money going to larger companies. Or, maybe they’ll extend some of the unemployment benefits that they put in place. 

It’s interesting to think about what’s going to come back first. I would think that if we get the all clear, it will just ramp right back up. I do worry a little about our cruise line partners, as they have been uniquely impacted here. For whatever reason, they were not able to get direct money out of Congress like the airlines were able to. So, I worry it may be a little slower to come back, or we may see consolidation there. It remains to be seen.

The Details
American Society of Travel Advisors
www.asta.org

Read more from TravelAge West about the COVID-19 outbreak.