How the CARES Act Can Provide Relief to Travel Advisors

Last week, Congress passed a massive stimulus bill known as The Coronavirus Aid, Relief, and Economic Security (CARES) Act. In it is relief for struggling travel advisors but, as these bills usually are, the language is dense and hard to decipher—so ASTA has stepped in to outline the benefits.

One of the clearest parts of the bill was the $25 billion in loans and loan guarantees reserved for the airlines and “ticket agents,” but there are many ways in which travel advisors can get financial relief from the bill.

“Most members will access relief through the Small Business Administration program,” ASTA President and CEO Zane Kerby told advisors on the webinar.

One of the major benefits of the CARES Act is that it opens access to unemployment benefits to independent contractors and the self-employed.

Workers on 1099 are not usually eligible for unemployment because they don’t pay into state unemployment programs; however, the CARES Act recognizes that this global pandemic has created an unprecedented need for relief. Self-employed people’s incomes have been decimated by this crisis, and now they will be able to have access to these benefits.

“Through the end of the year, ICs who meet the stated criteria can receive benefits through their state unemployment program to essentially the same extent that they would have if they were W2 employees,” said Peter Lobasso, Senior Vice President and General Counsel at ASTA.

The IC only needs to certify that he or she has been adversely impacted by COVID-19 and, but for that, would have been able to be available to work as usual.

“I believe that this requirement will be very loosely interpreted,” said Lobasso.

The amount of the benefit will be determined by each state’s computation system, but it will definitely be based on the IC’s net income for the last tax year. In addition, the IC will be eligible to receive an additional $600 available even if the worker was previously earning less than that.

The benefit will run through the end of the year, and those needing access should contact their state unemployment agency.

New Loans

Companies with more than 500 employees have access to $454 billion in loans and loan guarantees to support eligible U.S. businesses that have not received adequate relief from other available loan programs. This is in addition to the $25 billion that is earmarked for the airlines and travel agencies.

Applicants for these loans must establish that alternative financing is not reasonably available.

The terms are up to five years; interest is at prevailing market rates prior to COVID-19, and there is no loan forgiveness. The Treasury Department will be publishing application procedures and minimum requirements within 10 days of bill enactment.

SBA Economic Injury Disaster Loans

There are special SBA loans for businesses with fewer than 500 employees. Businesses don’t need to have employees to qualify, so independent contractors and self-employed people qualify for these SBA loans.

Loans provide up to $2 million and are designed to provide working capital for regular business expenses such as rent, payroll, utilities, etc.

The interest rate on these loans is 3.75 percent, and the maximum term is 30 years. There is no collateral or personal guarantee needed, and there is a one-year deferment on the first payment.

As of March 13, all 50 states and Washington, D.C., have been declared disaster areas for SBA purposes.

The SBA says that the best way to apply is online, which will be the fastest way to get approval.

Small Business Interruption Loans

This is a new program that loans up to $10 million to U.S. businesses that fall under the SBA size standards ($22 million in annual revenue or with 500 or fewer employees). Independent contractors and the self-employed are also eligible for these loans. These guidelines are less restrictive than they were previously, and these loans no longer require collateral or guaranty.

The portion of these loans that covers payroll, mortgage, rent or utility expenses from February 15 to June 30 may be eligible for loan forgiveness in whole or in part.

There is a less rigorous application process for these loans, and they have fixed low-interest rates and terms of up to 10 years.

Airline Economic Stabilization Loans

There is $25 billion set aside for Airline Economic Stabilization Loans. These are available through the Treasury Department for “ticket agents” and other related aviation industries. The Treasury Secretary and the Secretary of Transportation allocate these funds, and ASTA will work with these departments to implement the provision.

ASTA said that this portion of the relief package is probably going to take the most time to sort through because it is done in consultation with so many outside partners.

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