Shut Out of PPP Loans, DMOs Lead Call to Lawmakers
29 Apr, 2020By: Mary Helen Sprecher
The expansion of emergency relief legislation such as the Paycheck Protection Program (PPP) is great – unless you happen to be a destination marketing organization such as a convention and visitors bureau, sports commission or chamber of commerce. Then, you’re terrifyingly out of luck since most DMOs are ineligible for coronavirus relief funding under the PPP because of their non-profit or quasi-governmental status.
This is not something this industry wants to hear. One of the many impacted was the Big Sky (Montana) Chamber of Commerce, whose CEO, Candace Carr Strauss, took to social media to note:
A BIG "Thank You" to our congressional leadership for this bi-partisan and Hopefully soon bi-cameral show of leadership. The new $484 billion package was needed but the need to expand eligibility to 501 (C) (6) organizations was not addressed. Chambers of Commerce and Destination Marketing Organizations are part of the foundations upon which communities across the country are built. They will be rebuilding along with #smallbusinesses in the months ahead, but not if they can’t access the same economic relief.
“Both the Big Sky Chamber and VBS are 501(c)(6) nonprofit membership organizations and currently ineligible to apply for the emergency economic relief being provided by the PPP,” Strauss notes. “The COVID-19 crisis has not discriminated in its path of destruction. There are so many in need. However with 83 percent of businesses in America being small businesses, how is it the organizations created to ensure their success – destination marketing organizations and chambers of commerce – are being singled out? They are forging the path to recovery for so many others as community leaders. Eligibility needs to be expanded to help them as they to see their private and public funding sources evaporate.”
Strauss isn’t alone in her thinking. More than 80 U.S. House members from both sides of the political aisle recently signed onto a letter urging congressional leaders to provide relief for destination marketing organizations (DMOs) whose funding has been crippled by the COVID-19 crisis.
And the arguments for doing so are sound. Such organizations make enormous year-round contributions to the economy on a local, regional and even national level. And, as Strauss points out, once the danger has passed, they are going to be instrumental to economic recovery.
The US Travel Association has noted that 501(c)(6) DMOs are currently eligible for Small Business Administration (SBA) disaster loans of up to $2 million and the Treasury Department’s Exchange Stabilization Fund, which will also be distributed in the form of loans.
However, it points out, being carved out of the PPP program is devastating, particularly considering the loan forgiveness aspect of PPP.
“Every dollar that comes out of a DMO is put toward its economic development mission of attracting visitors who spend money in local small businesses and support jobs,” wrote Roger Dow, president of the US Travel Association. “But, just like all these businesses, DMOs are suffering from revenue declines, and are being forced to lay off workers. If a DMO’s only survival option is to take on loans, every dollar that’s spent repaying those loans over the next few years will be one dollar less that’s spent on supporting the economic recovery.”
U.S. Travel Association, of which Strauss is a board member, sent a letter to the Treasury Department in early April, asking more than 40 questions to clarify questions about its members’ PPP eligibility, and has noted that it will continue to press for transparency and solutions.
DMOs are not the only ones who are seeking relief. According to a report in the New York Times, more than 113 youth sports organizations signed a letter asking Congress to create an $8.5 billion recovery fund to help the industry recoup anticipated financial losses from camp and event cancellations.
Strauss says she will continue to advocate for relief for DMOs.
“Now more than ever, the role of tourism and the visitor economy in our world has been brought to the forefront. Not only is it an economic driver and job creator, but an inspiration, a ray of hope for all those who dream of travel and do travel. May 3-9 is National Travel and Tourism Week, and in communities both big and small all across America, we will celebrate the #SpiritofTravel together.”