SBA Program Summary
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, calls on the Small Business Administration to back loans mainly through its 7(a) loan program, which offers loans to eligible small businesses. This is in addition to the stimulus law passed on March 6, dubbed the Coronavirus Preparedness and Response Supplemental Appropriations Act which expanded the criteria for businesses to qualify for loans granted under the SBA's Economic Injury Disaster Loan Program. Below are summaries and links about both programs.
SBA 7(a) Program Summary
Summarized by the U.S. CHAMBER OF COMMERCE
The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses.
Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
The administration soon will release more details including the list of lenders offering loans under the program. In the meantime, the U.S. Chamber of Commerce has issued this guide to help small businesses and self-employed individuals.
Am I eligible?
You are eligible if you are:
In addition, some special rules may make you eligible:
What will lenders be looking for?
In evaluating eligibility, lenders are directed to consider whether the borrower was in operation before February 15, 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.
Lenders will also ask you for a good faith certification that:
How much can I borrow?
Loans can be up to 2.5 x the borrower’s average monthly payroll costs, not to exceed $10 million.
Included Payroll Costs
For Employers: The sum of payments of any compensation with respect to employees:
For Sole Proprietors, Independent Contractors, and Self-Employed Individuals: The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.
Excluded payroll cost
Will this loan be forgiven?
Borrowers are eligible to have their loans forgiven.
A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan:
How could the forgiveness be reduced?
The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees.
What if I bring back employees or restore wages?
Reductions in employment or wages that occur during the period beginning on February 15, 2020, and ending 30 days after enactment of the CARES Act, (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness. If by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.
When to Apply
Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply.
How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.
SBA Disaster Assistance Loan Program Summary
The SBA will be adopting regulations in the next week providing greater details.
SBA Disaster Assistance Loans
Time Frame January 31, 2020 - December 31, 2020 (Covered Period)
Small businesses, small agricultural cooperatives, private nonprofit organizations, and entities considered small for the industry in which they operate.
Must have suffered substantial economic injury (business is unable to meet its obligations and to pay its ordinary and necessary operating expenses) and be located in a declared disaster area. The entire country has been declared a disaster area for COVID-19.
SBA to approve loans based solely on an applicant’s credit score without requiring a tax return, or to use alternative methods to determine an applicant’s ability to repay.
FAQ’s – COVID-19 and Insurance Coverage
Q. How do I find out if I have Business Interruption Insurance?
A. Contact your Insurance Broker and/or review your commercial property policy?
Q. If I have Business Interruption Insurance, do I have a claim?
A. You can always file a claim. Whether it’s compensable is a very complicated answer.
Almost all commercial property policies require damage to property or a direct physical loss to the premises. One argument will be whether the virus constitutes physical damage to property and whether such damage caused a loss of income.
Some policies may have clauses that can cover losses related to a governmental action, such as an order shutting down restaurants.
Please note that many policies have exclusions that have to be examined.
It is also important to monitor legislation that may impact your ability to get compensation under your policies.
It is recommended to immediately speak to your Insurance Broker to make sure you follow the rules of the policy and timely file a claim to preserve your rights, if any exist. If it is unclear or unsettled whether you have coverage or not, you can still file a claim to preserve your rights.
Q. Is there anything I can do to reduce my insurance premiums?
A. Maybe. Some policies, like General Liability, are priced based on forecasted revenues and some polices, like Workers’ Compensation, are priced based on forecasted labor costs. Contact your Broker and ask them to “rerate” your polices based on revised forecasts. You may be able to reduce and/or restructure your insurance premium payments.
Q. Are there other types of insurance policies that can offer coverage related to COVID-19?
A. Yes, among others:
General Liability - The primary liability exposure for employers will be alleged negligence. For example, employers may face assertations that they failed to protect a customer or other third party from being exposed to the virus.
Directors and Officers - Suits may arise against directors and officers in the event a company is considered inadequately prepared to handle a pandemic that negatively impacts the business. Shareholders may allege directors’ and officers’ failure to perform the necessary contingency planning or failure to disclose the risks a coronavirus outbreak could have on the company’s business and financial results.
Workers’ Compensation and Employers’ Liability - In considering coverage for workers’ compensation claims, providers determine whether the injury occurred within the affected individual’s scope of work. Exposures to pandemic-type illnesses may also produce employers’ liability claims alleging contraction of the related illness due to employer negligence.
Considerations for State, Local, & Territorial COVID-19 Restrictions That Impact Air Transportation
The Federal Aviation Administration (FAA) is aware that States and localities have implemented or may consider implementing quarantine or travel restrictions on persons entering from certain locations within the United States and U.S. territories with sustained community transmission.
States, localities, and territories may wish to account for the following considerations when implementing any quarantine, movement, and/or screening requirements that impact air transportation. These suggestions draw on lessons learned from State, local, and territorial actions to date, as well as Federal guidance recommending unrestricted movement and access for critical infrastructure workers.
READ THE FULL ARTICLE HERE
Date of Article: March 28, 2020
The Airport Restaurant and Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC) are jointly calling for airports to institute an immediate moratorium on the issuance of solicitations for new concessions (RFPs and RFQs), and a suspension of solicitations currently in progress, pending the end of the pandemic.
In a letter being sent Friday to airports in the United States and Canada, the two trade groups said they are appreciative of airports taking initial steps to help mitigate the devastating impact of the Covid-19 pandemic on airport concessions.
READ THE FULL ARTICLE HERE
Source: Airport Experience News
Date of Article: Mar 20, 2020
Retailers, restaurateurs and minority partners urge North American airports to halt concession bids
USA. The Airport Restaurant and Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC) has urged airports to halt concessions bids and leasing processes until the COVID-19 crisis is under control.
In a letter sent today (20 March) to North American airport companies, ARRA and AMAC said they appreciated the initial steps many had taken to mitigate the impact on concession partners.
“However,” they added, “sales losses continue to mount quickly and at unsustainable levels, requiring a full-on effort by businesses to survive. In the face of such rapid traffic decline, we continue to work tirelessly to protect the public safety, maintain a level of service to remaining passengers, retain employees, and internally focus on the health of our individual businesses – requiring 100% of our time and effort.
“As such, we request that airports institute an immediate moratorium on the issuance of solicitations for new concessions (RFPs and RFQs), and a suspension of solicitations currently in progress, pending the end of the pandemic.”
Concessions crisis: Associations have called on airports across North America to halt RFPs and RFQs so their partners can focus on survival (Houston George Bush Intercontinental pictured above, Chicago O’Hare and Los Angeles airports, below)
As reported, earlier this week, ARRA and AMAC jointly urged US airports and Congress to ensure financial relief measures for their members, airport restaurateurs and retailers. Otherwise, they warned, many will be forced out of business.
Foodservice related industry associations are urging the government to take certain actions regarding the COVID-19 pandemic.
The Airport Restaurant & Retail Association (ARRA) and Airport Minority Advisory Council (AMAC) have asked Congress to provide financial relief to retail outlets and restaurants at airports because of the impact they have endured with the plummet of airline bookings and the government-mandated closure of airport restaurants, according to a March 18 press release.
As stated in the release, ARRA and AMAC are asking the federal government to:
and asking airports to:
The Owner-Operator Independent Drivers Association and the American Trucking Associations have written letters to U.S. Transportation Secretary Elaine Chao and U.S President Donald Trump asking that the government keep gas stations, rest areas and repair facilities open, according to Reuters.
The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) issued March 18 an expanded national emergency declaration to provide hours-of-service regulatory relief to commercial vehicle drivers transporting emergency relief in response to the nationwide COVID-19 outbreak, it stated in a press release. After a truck driver completes a delivery, he or she is obligated to receive at least 10 hours off duty if transporting property, and eight hours off duty if transporting passengers.
National Confectioners Association
The National Confectioners Association president and CEO John Downs has also written an opinion piece asking for governmental bodies to help small businesses.
"Small businesses are part of the nation’s critical infrastructure, and at times like these, it’s the multigenerational businesses in our communities, like restaurants, ice cream shops, theaters, independent clothing stores and others like those in the chocolate and candy industry, that put it all on the line," Downs wrote. "These companies contribute to the national and local economies in a way that should not be overshadowed by the bailout bonanza for big business currently being considered by Congress and the White House. For many of these small businesses, there is an immediate need for support if these companies are to survive.
"It’s time to harness the collective resilience, grit and determination needed to get assistance measures across the finish line for the family-owned companies in our industry and all small businesses across the country. Wholesalers, distributors and other family-owned companies alike need business interruption liquidity so that they don’t have to lay off their employees. In other words, our elected officials need to move quickly to provide no-interest loans to these companies so that they can make payroll."
F&B and retail ask for help
The USA’s Airport Restaurant & Retail Association (ARRA) and Airport Minority Advisory Council (AMAC) have urged airports and Congress to pass financial relief for airport restaurateurs and retailers affected by COVID-19 pandemic.
The associations urged airports to engage with their members quickly and adopt mitigating actions to save the businesses. Suggested actions included: waiving rent, other fees and the imposition of penalties for at least six months with the opportunity to extend depending on the extent/impact of the crisis; suspension and deferment of concessionaires’ capital investment requirements; and the provision of operational flexibility including, but not limited to, adjustments to operating hours, locations and menus/product selections, as well as selective temporary closing of stores and restaurants in order to better align with passenger volumes and flows and reduce the impact on employees.
ARRA/AMAC strongly support the airports’ request for emergency financial assistance and flexibility to help sustain operations, preserve jobs and bonds, including assistance and flexibility for concessionaires during this critical time. ARRA/AMAC urged Congress and the US administration to provide financial relief/assistance to airport concessionaires to ensure business continuity, secure loans and make debt service payments.
Specific measures that ARRA/AMAC urged Congress and the administration to act upon are: provision of grants/low-interest or interest-free loans to concessionaires to enable them to cover operating expenses; and provision of loan guarantees to concessionaires to assure their ability to continue making debt service payments and secure loans for their ongoing capital investment requirements.
Together, the associations represent a US$10bn industry made up of firms of varying sizes, including many small and local businesses which contribute US$2.5bn to airport revenue streams. These businesses employ more than 125,000 workers in US airports, according to the associations.
AMAC chair John Clark said, “Our members are suffering tremendous sales losses, in some cases as high as 90%. The industry is facing a financial crisis. Many businesses, including those classified as small and/or disadvantaged, may not be able to continue operations.”
The massive disruption in aviation caused by the COVID-19 pandemic has prompted concessionaire trade groups to seek relief in an effort to stem financial losses.
The Airport Restaurant & Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC) are urging both airports and the U.S. Congress to act.
Patrick Murray, president of the ARRA Board and executive vice president of SSP America, paints a dire picture of the concessions industry as the crisis deepens.
“Things are literally changing by the hour,” he says. “As of last Thursday [March 12], the business had lost about one-third of its sales – and I’m generalizing with the various components of our business: duty free, retail, and food and beverage. By Sunday [the losses] had grown to about 50 percent, and by yesterday we had lost another 5-8 percent of the business.
“You’re essentially looking at the airport business channel that we have coming to an almost grinding halt, with us losing 80 percent, 90 percent or perhaps all the sales for some period of time, plus not knowing what’s in front of us.”
John Clark, chair of AMAC, also notes the dire sales losses, adding, “The industry is facing a major financial crisis. Many businesses, including those classified as small and/or disadvantaged, may not be able to continue operations.”
Clark told AXN that many AMAC members have their personal finances directly tied to their businesses. “Many [ACDBEs and small businesses] have leveraged their mortgages, et cetera, to invest capital in the airports,” Clark says. “They depend on the revenue stream to meet not only their payroll but their bond covenants as well.”
ARRA and AMAC represent a $10 billion industry made up of firms of varying sizes, including many small and local businesses, which contribute $2.5 billion to airport revenue streams. Together these businesses employ more than 125,000 workers in U.S. airports.
The associations together are asking for relief from both airports and the federal government. The groups are asking airports to:
“Many of our airport partners have tried on their own to come to our support and defense,” Murray says, noting several instances of elimination of the minimum annual guarantee, alteration of operating hours and other efforts. “There is a lot of communication that has to go on. We’re just asking that everyone work overtime on this.”
He also stresses that ARRA and AMAC are supportive of airports in their efforts to obtain relief from the federal government. Concessionaires are also turning to the federal government. ARRA and AMAC are urging Congress and the Trump Administration to provide financial relief and assistance to airport concessionaires to help them continue operations, secure loans, and make debt service payments.
They are asking that the government:
“We want to get a strong message out to the airports, to urge them and to urge our members to get together to work out some arrangements. Many already are, and that’s where it has to start first,” says Rob Wigington, executive director of ARRA.
“We also need to send a strong message to Congress,” Wigington adds. “We want to be clear that we support the airports in what they’re asking from Congress. That will help not only the airports but it will [ultimately] help the concessionaires…. But it won’t be enough. This package that Congress is putting together can’t just be bailing out the airlines and helping the airports, as important as that is. It’s got to include something for concessionaires, particularly the smaller businesses.”
In addition to the specific actions ARRA and AMAC are requesting of airports and the federal government, they also urge airports to put the brakes on capital expenditures.
“Mid-term refurbishments or additional capital expenditures, or projects that are currently on the table for build-out – all of that really needs to come to a halt at a time when we’re literally ringing fewer and fewer sales and potentially heading toward zero,” says Judith Byrd, president of Byrd Retail Group and an ARRA Board member.
Larger projects also warrant reconsideration, according to Murray. “There are new terminals being built and there are efforts to keep those projects moving as much as possible,” he says. Murray suggests the money can be better used in shoring up the business. “We’re in much the same situation as an airline, in that regardless of the size of the company, liquidity is crucial right now. Continuing to build a capital project for a restaurant or retail operation would seem somewhat short-sighted today.”
The newly formed Airport Restaurant & Retail Association (ARRA) has hired its first executive director. Rob Wigington, the former president and CEO of the Metropolitan Nashville Airport Authority, has been tapped to lead the organization as it strives to educate the airport community on issues impacting airport concessionaires.
Nicholas Crews, president of Crews and the leader of the search committee for ARRA, says the group was seeking an individual with an airport management and trade association background.
“Rob stood out because of the experience that he has, [and] the temperament he has in being able to deal with some of opinionated concessionaires,” says Crews. “We thought he’d be a great fit to lead the organization.”
ARRA launched earlier this year after several months of planning by many of the industry’s leading concessionaires. Wigington, who has also worked at airports in Houston, San Diego and New York and has previously been involved with Airports Council International, says he can bring the airports and concessionaires together in a constructive way.
“A big part of it is to help the airports appreciate and better involve the concessionaires in their businesses in ways that are helpful and productive,” Wigington says.
“I thought it was a very smart idea to get organized in a way that can help the industry in a variety of ways, not just on issues that the airports and industry are facing, but also on challenges that come up such as the coronavirus,” he adds. “We’ll be in a much better to deal with this with concessionaires as a group …and also help the airports with their response. Obviously when you have a crisis like this you need quick action. We’ll be talking to ACI and other groups to see how we can help.”
More broadly, ARRA will be assessing its priorities in the coming weeks and months.
“We’ll be reaching out to airports and others in this industry to figure out how we want to work with them and be allies with them on their issues,” Wigington says. “We want to support airports where we can on a range of issues they’re dealing with, but we’re also going to be looking for their support on issues that we deal with.”
Judy Byrd, president of Byrd Retail Group and an ARRA Board member, says airports thus far has been receptive. “I think this can be, and is intended to be, a resource to airports,” she says. “Some may not view it that way today, but I think they’ll come around to that viewpoint. Rob’s experience and background really will help us to pave the way to what we hope will be a healthy collaboration between ARRA and the airport community.”
ARRA will also be adding to its membership. The group launched in January with more than 20 concessionaire members, and is expecting to add at least that many more as relationships are finalized.
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