Economics

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Latest PPP “Improvements” Haven’t Improved Life for DMOs

5 Jun, 2020

By: Mary Helen Sprecher
Action is Needed - Here's Where to Start

Funding isn’t in the cards. Disappointment is. And that means it’s time to take action.

Sports commissions, CVBs and other economic development groups who had been hoping for relief from COVID-19-related losses learned late last week that changes to the Paycheck Protection Program would not include them. And the industry, supported by Destinations International and the US Travel Association, as well as Sports Destination Management, is out of patience.

The latest changes to the PPP loan program, according to CNN, were intended to make loans more accessible under the program by making its terms of use more flexible. They also give small businesses more time to use emergency loans under the program by extending the eight-week period in which they must use the money to qualify for loan forgiveness to 24 weeks. Additionally, there are changes to the so-called 75/25 rule, which requires recipients of funds under the program to use three-quarters of the money for payroll costs and limit other costs to no more than 25 percent in order to be eligible for loan forgiveness. The new ratio would be at least 60 percent on payroll and no more than 40 percent on other costs. The changes also allow businesses that receive loan forgiveness under the program to defer payroll taxes.

Unfortunately, none of those changes make the program applicable to 501(c)(6) organizations like sports commissions, CVBs and other quasi-governmental economic development organizations, all of whom are staggering from the effects of COVID-19, which has essentially killed tourism. And even as many states begin the graduated process of reopening, full recovery remains elusive.

As organizations like Destinations International and US Travel Association continue to lobby for changes to the PPP loan structure, Sports Destination Management is also urging event owners, destinations and all those in our industry to contact their elected officials on the matter:

  • To find out who the elected officials are at your district, local, state and national levels, along with their e-mail addresses, phone numbers and other contact information, click here.
  • SDM has developed a letter for industry members to personalize and use to send the above lawmakers; to download a copy, click here.

The US Travel Association’s Executive Vice President of Public Affairs and Policy Tori Emerson Barnes, issued a stinging reminder to lawmakers about the shortcomings of the current program, noting that 501(c)(6) organizations “are vital drivers of local and regional economic development. Like the businesses they serve, the finances of these non-profits have been devastated by the standstill in travel and tourism, and the moment of recovery will be moot unless they can keep their lights on to take advantage of the return in travel demand.”

US Travel has been trying since the inception of the PPP loan program to get the scope enlarged, as has Destinations International.

DI, in a statement in May, noted that  US Representatives Brian Fitzpatrick (PA-01), Chris Pappas (NH-01), Greg Steube (FL-17), and Gil Cisneros (CA-39) introduced bipartisan legislation that would extend PPP benefits to chambers of commerce and destination organizations through the Local Chamber, Tourism, and 501(c)(6) Protection Act.

In a joint statement, these legislators wrote: “Like the businesses they serve, many local chambers, tourism-related organizations, and other 501(c)(6) nonprofits are now experiencing their own financial challenges brought on by COVID-19. These organizations are not currently eligible for the Paycheck Protection Program (PPP) to get financial support. The Local Chamber, Tourism, and 501(c)(6) Protection Act would expand PPP eligibility to include 501(c)(6) organizations with 300 or fewer employees to ensure they can continue supporting our main street businesses and local economies.”

Unfortunately, it failed to gain traction.

Travel Agent West, in an article entitled, “Here’s What’s Wrong with the Paycheck Protection Program,” noted that key segments of the hard-hit travel industry currently have no customers nor revenue streams.

The article quoted US Travel’s Emerson as noting that “Even travel businesses and jobs that are saved now won’t make it through the recovery without the work of DMOs to bring back travel demand once the economy reopens.”

And, said one small business owner who was quoted in the Travel Agent West article, recovery won’t come to the nation as a whole unless all aspects of the economy are considered.

“We do not need to screw this up just because we want to go fast,” she said. “We now know the shutdown is going to go a lot longer than anyone anticipated when the CARES Act was written in March. So let’s pump the brakes and recognize that when you have millions of different businesses seeking relief, any attempt to create a one-size-fits-all spending solution is a recipe for disaster.”

SDM will continue to follow this developing issue and will continue to work on behalf of the members of this industry, to help obtain relief.

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