Despite travel advisors within Travel Leaders Network (TLN) applying for loans under the $2 trillion CARES Act, almost none of them actually received funding before the programs ran out of money this week, according to a survey of TLN’s membership.
Travel agencies, independent contractors and the self-employed were eligible to apply for assistance through the Small Business Administration’s (SBA) new Paycheck Protection Program (PPP), which offered low-interest, forgivable loans of up to $10 million; or the department’s pre-coronavirus-era Economic Injury Disaster Loan (EIDL) program, which was recently enhanced to offer a $10,000 cash advance that borrowers could use as they waited for the rest of the loan to be apportioned. (Editor’s note: Before funding ran out, the EIDL’s $10,000 advance was decreased to $1,000 per payroll employee, and the overall loans reduced to $15,000 per business, rather than the promised $2 million.)
More than one-third (36.7%) of TLN advisors surveyed say they applied for a PPP loan, but a whopping 94.8% did not receive approval or funding by the time the funds dried up on April 16. Meanwhile, more than half (51%) of respondents say they applied for the EIDL with the new cash advance, but nearly none report they received any funds as of press time.
TLN is North America’s largest travel agency consortium, representing nearly 55,000 advisors, and these dismal findings mirror much of what the larger travel industry — and small businesses across the country — is facing.
Roger E. Block, president of TLN, says these relief programs are specifically critical to the long-term viability of the travel agency model, which is likely to recover at a slower pace than other industries once the pandemic is over.
“Paycheck protection is desperately needed for travel advisors, who are in a commission-based business payable only after the date of travel, which hampers the cash flow and the ability of agency owners to be able to afford to pay staff when people aren’t traveling,” Block said. “Travel agencies are one of the few industries that aren’t paid at the time the trip is booked, but instead after the traveler departs for their journey. That’s why financial relief programs are very critical to the long-term viability of some of the agencies in our network who have seen revenue declines of 70, 80 and 90% in the past few weeks.”
Travel agencies are one of the few industries that aren’t paid at the time the trip is booked, but instead after the traveler departs for their journey. That’s why financial relief programs are very critical to the long-term viability of some of the agencies in our network.
And until these programs receive replenished funding — a move strongly encouraged by both TLN’s parent company Travel Leaders Group and the American Society of Travel Advisors — these agents will continue to play a waiting game.
An April 16 statement from the SBA reported that the department is “currently unable to accept new applications for the PPP based on available appropriations funding,” including those applications that were in the hands of lenders, but had not yet been submitted to the SBA.
In some cases, the claims were submitted right when the PPP launched on April 3 — as was the case with Alex Kutin, a TLN advisor based in Indianapolis.
“I don’t know anyone who has received any money; it’s the ‘non-existent loan’ situation,” Kutin said. “I applied for the PPP program the day it came out, and I got a notice that I completed it. And I have heard nothing. Not hearing anything is what is so aggravating.”
Loveland, Colo.-based Kristy Osborn also applied for PPP as soon as it became available. As of this week, her banker said it was in underwriting.
“I did ask how many applications they had accepted, and she said their bank had processed 4,000 — and not one is approved yet,” Osborn said. “We currently continue to pay our staff their existing salaries. They are working from home and are maintaining their original hours. I can’t even grasp what this will do to us if we can’t receive financial assistance.”
I did ask how many applications they had accepted, and she said their bank had processed 4,000 — and not one is approved yet. I can’t even grasp what this will do to us if we can’t receive financial assistance.
On the other hand, TLN advisor Dennis Heyde, who is based in Chippewa Falls, Wis., represents one of the few CARES Act success stories.
He began investigating assistance programs on March 12, nearly two weeks before the CARES Act passed (on March 25). He applied for relief through both PPP and EIDL, and immediately received a confirmation number. Yesterday, he received his funds.
“You sit blind on this,” he said. “There is nowhere to call.”
TLN members are encouraged to use the organization’s support and resources. This includes live webinars and on-demand workshops featuring a variety of COVID-19-specific topics: how to fine-tune budgets, how to negotiate with creditors and how to emotionally cope with stress related to the pandemic.
The Details
Travel Leaders Network
www.travelleaders.com
Read more from TravelAge West about the COVID-19 outbreak.
