ASTA Sends Letter to SBA, Recommending PPP Changes

SBA Loan
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In a letter to the U.S. Small Business Administration (SBA) in response to its request for comments on the Paycheck Protection Program (PPP), the American Society of Travel Advisors (ASTA) says the program has numerous shortcoming.

“While the program has provided a critical financial lifeline to those of our member companies who have successfully been able to apply since its launch on April 3, shortcomings associated with the initial rollout suggest the need for improvements,” Eben Peck, ASTA’s EVP, advocacy, said in the letter. “Our concerns, summarized, are that the program’s funding will be quickly depleted again after its replenishment by the Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139); that the last-minute rules put in place by the SBA make the loans less attractive to both borrowers and lenders; that the parameters of the program will leave both larger (those with more than 500 employees) and smaller (ICs) travel agency businesses without relief; and that overly restrictive “hire-back” provisions incentivizes adding workers to payroll at a time when business remains at a standstill as opposed to when business is expected to return later this year and into next.”

The good news is that some of these issues are within the SBA's power to fix. ASTA, after gathering member feedback, recommend the following changes be made:

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  • To the extent SBA has such administrative flexibility, increase PPP loan forgiveness provisions from eight to at least 12 weeks and allow the “forgiveness clock” to begin running at the borrower’s discretion based on business conditions, as opposed to the date of loan origination
  • Increase PPP loan terms to at least five years, as compared to two years, providing travel agencies with more affordable payments as well as additional time to pay the loans back
  • Raise the non-payroll forgiveness cap from 25 to at least 50 percent, which would allow small businesses to spend half or more of the loan proceeds on statutorily authorized non-payroll expenses such as rent, utilities and mortgage interest payments
  • Clarify whether travel agency payments made to ICs may be included in “payroll” for the purposes of determining an applicant’s PPP loan amount
  • Treat ICs and the self-employed equally rather than forcing them to the “back of the line,” as the week-long application gap between free-standing businesses and ICs on the PPP’s launch did

Peck adds that while it will take years for the travel agency industry to recover, the outlined steps being included as part of the enhancements to the PPP, in addition to other government relief programs, will help speed up the recovery.

This article originally appeared on www.travelagentcentral.com.

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