The travel industry has experienced a great deal of uncertainty over the years, but no crisis has struck us as hard as COVID-19. At the end of March, Congress passed a massive stimulus bill known as the Coronavirus Aid Relief and Economic Security Act, known as the CARES Act. The program was set up to help businesses in the heat of COVID-19. Travel was booming before the COVID-19 hit, and now it’s taking a 48% drop from its previous level. Travel companies need to take advantage of the CARES Act so that when passengers are willing to start traveling again, you will always be there to support them.
Below we clarify some of the big incentives that travel companies can make use of.
The Economic Injury Disaster Loan (EIDL) program allows any small business to receive fairly quick loans of up to $2 million directly from the Small Business Administration (SBA). The SBA has a loan of $10 billion under this program.
Any company with 500 or fewer employees, as well as sole proprietors and independent contractors, can apply.
EIDL loans can be used to fund fixed expenses, payrolls, accounts payable, workers’ sick leave, and other bills that cannot otherwise be paid. The CARES Act also requires applicants for EIDLs to apply for an advance of up to $10,000 from SBA, which will not be refunded even if the applicant is eventually rejected.
The Paycheck Protection Program (PPP) is a $349 billion loan program that will allow all companies (including ICs) suffering from coronavirus outbreaks to borrow money for a variety of qualified expenses, including employee insurance (of those earning less than $100,000), health benefits, payroll, electricity, and interest. It is by far the best new system for companies, ICs, and tour operators. This plan subsidizes salaries and associated costs so that you don’t have to lay off your workers! This policy can be partially or even completely repaid on the basis of a complex calculation that effectively ensures that the more workers you retain or bring back within eight weeks of getting the loan, the more you pay.
You will apply at one of the 1,800 banks that are part of the SBA loan system on a regular basis. You may apply through the current SBA 7(a) lender or through any federally insured depository agency, the federally insured credit union, and the participating farm credit program. Travel Advisors will consider a nearby Small Business Development Center to better target which organization is in place.
Another part of the bill was the $25 billion in loans and loan guarantees allocated for airlines and ticket brokers that will keep the airline industry going, but there are also more immediate opportunities for travel consultants that we have mentioned above.
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