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The world is already a month into a new year, and with the recent inauguration of President Joe Biden, the U.S. is on the brink of some big policy changes. The turning of a new chapter is a breath of relief for many people — and particularly for the struggling travel industry — but for travel advisors and agencies still barely remaining afloat in a continuing pandemic, many days often feel like Dec. 37th, 2020.
Luckily, Congress ended its drawn-out impasse over COVID-19 relief in late December, passing another round of stimulus. The new $900 billion Coronavirus Relief stimulus package will hopefully be a boon for travel advisors with its expansion to the Paycheck Protection Program (PPP).
The legislation provides more than $284 billion to the U.S. Small Business Administration (SBA) for first and second PPP forgivable small business loans and allocates $20 billion to provide Economic Injury Disaster Loan (EIDL) grants to businesses in low-income communities (the total amount also includes $138 billion of unspent loans from the first round reinvested). The deadline for loan application has been extended to March 31, and two notable changes to the second-draw loans are the inclusion of quasi-governmental destination marketing organizations and lobbying groups with fewer than 300 employees, as well as a change from the 75/25 allocation of payroll costs/other eligible expenses to a 60/40 split.
The SBA Is a Direct Line to Free ResourcesWe know advisors have a lot on their plates, and adding PPP loan research and paperwork to the mix might feel overwhelming. But Beth Goldberg, New York district director for the SBA, stresses that taking the time to study up on the loan requirements and making sure you have all the information you need before you apply is key.
“Entrepreneurs have to remember that they not only work in their business, but they have to take the time to work on their business, and seeking financing and the capital they need is part of that,” she said. “If they do their prep work and know what the rules are, it’s better to take that little extra time and know exactly how the money can be used and how it applies to their business, and then feel secure in applying for the loan.”
Entrepreneurs have to remember that they not only work in their business, but they have to take the time to work on their business, and seeking financing and the capital they need is part of that.
Goldberg, who joined the SBA after more than 30 years as an entrepreneur, suggests that advisors take advantage of the many free resources the organization offers. These include Local Assistance, which allows users to enter their zip code to find nearby help, from professional business development centers at college campuses to experts from nonprofit organization SCORE, the largest network of volunteer business mentors in the U.S.
Lender Match, meanwhile, connects small businesses with SBA-approved lenders who can help with PPP applications (note: this program cannot be used for funds acquired through the EIDL program); Goldberg notes that more than 4 million matches have been made nationally through Lender Match. She also points to a sample loan application that’s available on the SBA’s website (also available in multiple language translations) as a resource to help applicants know what to expect.
The PPP application reopened on Jan. 11 and first focused on providing dedicated access to community financial institutions that specialize in working with underserved communities, including minority-, women- and veteran-owned small businesses. So far, the SBA has approved some 60,000 PPP loan applications submitted by nearly 3,000 lenders for more than $5 billion in bonds. As of Jan. 19, PPP is open to all participating lenders.
Travel Advisor Experience and RecommendationsAshley Morris, owner of Alpaca Your Bags Travel in Warrensburg, Mo., found that applying for both rounds of PPP loans through her small, local, community-oriented bank proved an ideal experience. She says that from day one, Equity Bank assembled an internal task force to handle the influx of requests, and that its team was organized, calm and collected — even when regulations and available information appeared to be changing frequently.
“I was approved very quickly for both programs; I think the speed of my PPP approval is a direct result of working with a smaller, local bank,” Morris said. “I have business-owner peers who had to complete much more paperwork and jump through many more hoops with the larger banks. Much like how our travel advisors serve their clients, my bank experience was personalized, attentive and filled with information.”
We are desperate right now to stay in business, and it is bad enough I had to go in the hole with the EIDL loan, but I worked too hard to build my business and I’m not ready to give up.
Ruby Stanfield, President and CEO of New Jersey-based RubysTravel.com, also credits her first-draw loan approval in part to building a relationship with her bank. Stanfield says she worked with three different banks on her PPP applications and remained proactive, contacting each every few days until one got back to her. She then got to know the bank employees handling the loan, who then reached out to her about applying for the second draw.
Although the first round of funding helped her pay rent for three months and keep one employee, Stanfield says she has been frustrated with the wait for more funds, which led to her furloughing her staff and taking on an EIDL loan.
“We are desperate right now to stay in business, and it is bad enough I had to go in the hole with the EIDL loan, but I worked too hard to build my business and I’m not ready to give up,” she said.
One top suggestion Stanfield has for advisors is to keep records of everything in one place as you go through the loan process.
“Save all your receipts of payments now so you do not have to go crazy looking for them when it is time for the forgiveness process,” she said. “Do not be in a hurry to apply for forgiveness, because the rules keep changing for the better.”
ASTA Helps Advisors Prepare for ObstaclesOf course, not everyone has had positive experiences with the PPP process.
Amy Freyder, owner of Epic Away Travel in Newport Beach, Calif., received a small loan from the first PPP draw, but has been confused by the loan forgiveness process and frustrated by the lack of help from her bank.
“They told me they have no idea how I received the PPP money without payroll,” she said. “My company is new, and as such, I didn't take any money from it — just used commission to pay for expenses and startup costs. Now, I'm afraid I'm going to have to give it back, but I've been using it to stay afloat with monthly expenses. The whole process has been incredibly confusing, and when I went into the bank no one could help me.”
Between knowing the loan and forgiveness requirements, going through the application process and sticking to the funding stipulations, there is a lot for advisors to know — and a lot that they could misunderstand.
One thing Goldberg of the SBA reminds borrowers is that, while perhaps not ideal, there are options for loan repayment if advisors do not achieve the 60% payroll, 40% non-payroll expenses split.
If they can’t exactly achieve what they say in their application, they still have the option of this 1% loan or paying back the money that didn’t meet the forgiveness.
“They can have a combination of forgiveness and conversion to a 1% loan over five years [for loans issued after June 5, 2020],” she said. “If they can’t exactly achieve what they say in their application, they still have the option of this 1% loan or paying back the money that didn’t meet the forgiveness.”
In addition to the SBA, an important and advisor-specific resource for sorting through the legislative mire is the American Society of Travel Advisors (ASTA).
Since last March, ASTA staff, members and outside lobbyists have been working nonstop to secure the maximum amount of government relief for the travel industry in the wake of the COVID-19 pandemic, according to Eben Peck, executive vice president of advocacy for the organization.
“With the passage of the latest relief bill, we are committed to helping each and every one of our members access this sorely needed relief,” he said.
Via tools such as member webinars, a continuously updated COVID-19 member page, an updated PPP fact sheet, guidance on loan forgiveness, state-by-state unemployment rules and a form to pose specific questions to ASTA staff, agency owners and independent advisors can find answers to their pressing questions by becoming an ASTA member.
The DetailsAmerican Society of Travel Advisorswww.asta.org
U.S. Small Business Administrationwww.sba.gov